Rental firm has been stung by the heavy depreciation and repair costs affecting EVs
https://www.carscoops.com/author/chris-chilton-cc/
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by Chris Chilton
February 6, 2024 at 16:31
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Still unsure whether an EV would suit your lifestyle, and not convinced a quick test drive at the dealership would help you get a clearer idea? Renting a Polestar or Tesla through Hertz has been a great way to try before you buy for the last year or so, but that option is about to become less available.
The rental agency is reportedly pausing plans to purchase thousands of Polestar EVs after being badly hurt by the unexpectedly high depreciation and repair costs suffered by electric cars. Back in 2022, Hertz committed to buying 65,000 Polestars in a five-year deal valued at $3 billion. The firm had already agreed to buy 100,000 Teslas as part of its push to make 25 per cent of its rental fleet electric.
More: Volvo Is Done With Polestar, Will Cease Funding And Likely Dump Stake To Geely
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While Hertz has yet to officially confirm news about its revised Polestar plans, the Geely-owned automaker’s CEO, Thomas Ingenlath, told the Financial Times that Hertz’s boss had asked last fall whether it could pause its purchase contract during 2024. Polestar agreed to the proposal, the FT reports, on condition that Hertz wouldn’t offload its existing Polestar fleet cars quickly or at low prices, which could further depress values.
Ingenlath claims that Hertz has agreed to retain its current fleet for at least a year and give Polestar first dibs on cars that it wants to dispose of after that point. He also stressed that the two firms planned to restart their program at a later date.
Related: Hertz Selling 20,000 Rental EVs, Will Replace Them With ICE Cars
Last month Hertz confirmed it would be selling off 20,000 EVs and replacing them with traditional combustion-powered rentals that are cheaper to repair and don’t depreciate as heavily. CEO Stephen Scherr had previously admitted in an earnings call that while electric vehicles generally have lower maintenance costs, the higher expenses associated with repairs and damages were impacting the feasibility of the company’s deal to buy 100,000 Teslas. Repeated price reductions for new Teslas have also badly hurt the residuals of older models.
Hertz isn’t the only rental firm cooling on EVs after encountering higher than expected costs. Last December, Sixt revealed it was dropping Teslas from its rental fleets due to savage depreciation, but said it would retain Chinese BYD EVs.
