Hertz has decided to halt its acquisition of 65,000 Polestar electric vehicles, marking a shift away from its ambitious move towards electrifying its fleet. After parting ways with Tesla models in January 2023, the US car rental giant is now reverting back to a petrol-powered fleet strategy.

Hertz Changes Plans, Pauses Plans of Buying Polestar EVs

Initially, Hertz's bold initiative aimed to electrify up to 25% of its fleet by the end of 2024, with hopes of reducing maintenance costs and appealing to new customers. But the company's plans have run into trouble, and the purchase of Polestar EVs has been put on hold.

According to a report from Inside EVs Global, Hertz's intended acquisition of 65,000 Polestar vehicles by 2027, beginning with the Polestar 2 and expanding to the forthcoming Polestar 3 crossover, seems to have hit a roadblock. This setback is a result of substantial repair expenses and the steep depreciation of its Tesla EVs. Additionally, rental customers frequently encountered challenges. These difficulties make Hertz's switch to electric vehicles much more difficult to manage.

Additionally Inside EVs Global also shared that Polestar's CEO,Thomas Ingenlath, revealed that Hertz informed him of the decision to pause their purchasing plans late last year. At that point, Polestar had already supplied approximately 13,000 vehicles to Hertz, which accounted for roughly 20% of the initially announced quantity just over a year earlier.

Allegedly, Polestar consented to terminate the agreement with Hertz under the condition that the rental company refrains from rapidly flooding the used market with its fleet or selling it at significantly reduced prices.

Furthermore, Drive noted that Hertz had previously unveiled its intention to purchase 65,000 electric vehicles from Polestar. However, as per a report from the Financial Times, Polestar's CEO, Thomas Ingenlath, was notified of the impending halt in purchases by Hertz's CEO, Stephen Scherr, late last year.

According to the report, Polestar consented to the agreement under the condition that Hertz refrains from quickly selling off its existing inventory of 13,000 Polestar vehicles at reduced prices.

This development comes as Hertz commenced the sale of 20,000 Tesla electric vehicles from its fleet in January 2024. The rental giant had previously attributed the shift back to petrol-powered cars to high repair costs and lower depreciation values associated with electric vehicles.

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​ Hertz Decision Affects Polestar's Stocks

According to Electrek, Polestar (PSNY) shares are experiencing a decline today following the announcement by car rental giant Hertz that it pauses plans of buying Polestar EVs for this year. While Hertz and Polestar express a clear intention to revive large-scale sales, the possibility of this happening in 2025 remains uncertain.

Ingenlath mentioned that the companies would need to reassess the situation when the time comes. This development comes in the wake of Volvo's announcement to divest its nearly 50% stake in Polestar to its parent company, Geely. Volvo also declared its decision not to continue investing in the brand. In pre-market trading, Polestar stock witnessed another 6% decrease. PSNY shares have now plummeted by over 70% in the past year.

Electrek also noted that Hertz was able to come out of bankruptcy after the pandemic.The leader in the rental market is expected to reveal its earnings on Tuesday, offering details on Hertz's financial situation following the publication.

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