Hertz halts plan to buy 65,000 electric cars amid EV slump

• Hertz is pausing plans to buy 65,000 EVs from Polestar, the Swedish firm's CEO told the FT.
• It comes after Hertz said it would sell 20,000 electric vehicles due to high repair costs.

Hertz is scaling back its EV ambitions.

The rental car giant is pausing plans to buy 65,000 electric cars from EV pioneer Polestar, according to comments made by Polestar CEO Thomas Ingenlath in an interview with The Financial Times.

This comes just weeks after Hertz said it would sell off 20,000 EVs — one-third of its electric vehicle fleet — citing high repair costs as a key reason for this.

Hertz's estimated $3 billion agreement with up-and-coming EV maker Polestar in 2022 was seen as a major moment for electric vehicle adoption.

It came after Hertz struck a similar deal with Tesla and agreed to buy 100,000 of its EVs in 2021. That deal has also had its issues, with Elon Musk's barrage of price cuts driving down the value of Hertz's fleet of used Teslas.

The rental company agreed to buy the Polestar's vehicles over five years as part of plans to have a quarter of its global fleet be fully electric by 2024.

However, since then the global EV market has stalled, with demand for electric cars slumping and major automakers rolling back some of their investments.

That's a problem for Hertz, which largely owns its vehicles outright and therefore faces big losses if their resale value falls.

The company said in January it plans to sell 20,000 EVs from its fleet, including Teslas, Chevrolet Bolts, and Volvos. Many are already available online at a steep discount.

Ingenlath told the FT that Hertz CEO Stephen Scherr contacted him last autumn to ask if the company could pause its agreement to buy a certain number of cars this year — which Ingenlath agreed to, so long as Hertz did not sell its current Polestar vehicles early or too cheaply.

The pause isn't great news for Polestar. Part-owner Volvo announced that it would stop funding the Swedish automaker last week, and Polestar is struggling to attract customers amid the wider EV slump, missing its delivery target for 2023.

Hertz is just the latest major automaker to rethink its ambitious EV goals in recent months. That includes General Motors, with CEO Mary Barra saying last month that the company would change tack and roll out a range of hybrids — several years after it said it would become an all-electric auto company.

Hertz did not immediately respond to a request for comment from Business Insider, made outside normal working hours.