Polestar to sell 65,000 electric cars to Hertz in $3bn deal

Swedish electric car maker Polestar has struck a roughly $3bn deal to provide rental group Hertz with 65,000 electric cars over the next five years, echoing a similar deal made with Tesla last year.

The agreement will see the rental owner buy battery models for use in Europe, the US and Australia, in a move that will give more motorists the chance to drive electric cars, which remain more expensive than petrol alternatives.

Although neither company put a value on the deal, the entry level Polestar 2 begins at $49,000, giving a total order value of about $3.2bn if Hertz pays full price for basic-level models.

The Hertz deal is similar to an agreement Tesla made with the hire car operator last October to provide 100,000 models, and comes as Hertz tries to increase the number of battery models in its fleet.

Hertz had an average of just under 500,000 vehicles in its fleet last year. The rental company, which filed for bankruptcy during the pandemic because of a collapse in demand, has pledged to offer the largest electric rental fleet in North America, and “one of the largest in the world”.

The order number represents twice Polestar’s entire sales last year, which were 29,000. The carmaker, which is backed by Volvo and China’s Geely, currently produces its battery models at a plant in Chengdu, China, and is increasing deliveries.

EV sales are rising across the world, as carmakers push new electric models to meet emissions targets and as consumers turn to the new technology. 

In Europe, electric car sales overtook diesel last year, while in Norway more than 80 per cent of new cars sold are battery-driven.

Dealers and industry executives say that test drives are critical for winning over motorists, giving them the chance to experience the silent driving and instant acceleration of electric vehicles.

Polestar chief executive Thomas Ingenlath said the agreement with Hertz would “bring the amazing experience of driving an electric car to a wider audience”.

The first Polestar sales will be this spring for European fleets and later in the year for the US and Australia.

“By working with EV industry leaders like Polestar, we can help accelerate the adoption of electrification while providing renters, corporate customers and rideshare partners a premium EV product, exceptional experience and lower carbon footprint,” said Hertz chief executive Stephen Scherr.

Last year’s Tesla-Hertz agreement led to a spike in the carmaker’s share price, helping its value top $1tn for the first time, although the stock has since come down.

Polestar is planning to list its shares later this year through a merger with Gores Guggenheim, a special purpose acquisition company.