Under a previous deal, Polestar would sell up to 65,000 vehicles to rental-car company Hertz.
Polestar has agreed to release Hertz from the purchase agreement for its vehicles for the time being.
The terms of the agreement protect Polestar’s resale value.
The resale value of electric cars is already tricky.
This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by an editor.
The electric car manufacturer Polestar and the car rental company Hertz have agreed to temporarily pause the contract for the purchase of new Polestar vehicles by Hertz. One aspect of the agreement points to a larger problem in the electric car market.
While Hertz is selling a third of its electric car lineup, auto executives are worried that the flood of used electric cars could cause the resale value of these vehicles to plummet.
That’s why Polestar CEO Thomas Ingenlath told the Financial Times that his company would only be willing to waive its demand from Hertz to buy more cars from Polestar if the car rental giant agreed to some key conditions.
Hertz has to keep its current inventory of Polestar vehicles for “longer than a year,” Ingenlath told the FT. “Polestar also has the right of first refusal,” said Ingenlath, whenever Hertz wants to remove one of its vehicles from the fleet to prevent a sell-off that could adversely affect the current value of Polestar’s cars.
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Polestar and Hertz entered into a five-year agreement in 2022 to purchase 65,000 vehicles. This agreement came shortly after another landmark agreement to purchase 100,000 vehicles from Tesla.
At the time, contracts signaled that electric cars were on their way to the mainstream, but 2023 proved to be a more difficult year for the electric car segment as demand slowed and resale values of electric cars collapsed.
Hertz cited these challenges as it began selling a large portion of its electric vehicle fleet earlier this year. That same day, a number of Teslas were offered on the Hertz used car website, many of them priced at $25,000 or less (the equivalent of around 23,250 euros). That’s slightly less than the average for all used electric vehicles according to data from Recurrent is around $27,800. Overall, prices for used electric vehicles fell by around 32 percent last year, according to the company.
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It seems like Polestar, following Volvo’s exit as a backer, is trying to avoid this outcome for its fleet as used electric vehicle values are already sensitive. Electric cars tend to lose value more quickly than combustion engines, which can have a negative impact on the sales price of new vehicles.
Any cut in the values of electric cars means problems for start-ups and long-established car companies alike. The situation has worsened over the past year as electric car sales shifted and Elon Musk’s Tesla exerted continued pricing pressure.
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