Shares of Polestar experienced a decline on Monday following the announcement by car rental giant Hertz of its intention to postpone the acquisition of Polestar electric vehicles (EVs) for the current year, as reported by the Financial Times.
Hertz had previously garnered attention with a substantial order of 100,000 Tesla Model 3s in 2021, aiming to bolster its electric vehicle rental offerings. This commitment was later extended to include Tesla's Model Y in the subsequent year. In a strategic move, Hertz then entered into an agreement with Polestar, pledging to acquire up to 65,000 Polestar EVs by 2027.
However, recent developments have seen Hertz adjusting its plans. In early January, Hertz disclosed the sale of approximately 20,000 Tesla vehicles, redirecting some of the proceeds toward purchasing new gas-powered cars, citing a decline in Tesla's prices from their peak. Furthermore, Hertz conceded that it would not meet its previously set goal of having electric vehicles constitute 25% of its fleet by the end of the year.
Polestar, having already supplied around 20,000 EVs to Hertz over the past two years, demonstrated flexibility by waiving the required 2024 order, as reported by FT. In return, Hertz committed to retaining Polestar vehicles for an extended period, with the agreement to “keep the cars longer than a year.” Polestar CEO Ingenlath clarified that the rental giant would need to offer Polestar the first opportunity to acquire any EVs removed from its fleet.
Despite the current setback, both Hertz and Polestar expressed intentions to revive large-scale sales in the future, though specific timelines remain uncertain. Volvo's recent announcement of plans to sell its nearly 50% stake in Polestar to parent company Geely, coupled with the decision to cease further investments in the brand, adds another layer of complexity to the situation.
In pre-market trading, Polestar stock registered a further 6% decline, contributing to a cumulative decrease of over 70% in the past 12 months for PSNY shares.