Rental car company Hertz (NASDAQ: HTZ) has announced plans to purchase up to 65,000 electric vehicles (EVs) from Swedish car manufacturer Polestar. The deal will unfold over the course of five years and will rapidly expedite Hertz's goal of adding more battery-powered cars to its growing fleet.
Let's take a closer look at this newly established partnership.
As Hertz CEO Stephen Scherr put it in the company's press release, "today's partnership with Polestar further builds on our ambition to become a leading participant in the modern mobility ecosystem and doing so as an environmentally-forward company." Global shifts towards both sustainability and EVs are gaining huge traction, and Hertz is aiming to be at the forefront of those changes.
By rapidly expanding its electric fleet, it can take advantage of the more widespread adoption of electric vehicles, while also positioning itself as a forward-thinking and environmentally friendly company.
For Polestar, the guarantee of an order of 65,000 vehicles is massive. The company produced 29,000 vehicles across the entirety of 2021, so this deal will go hand-in-hand with its planned production expansion. CEO Thomas Ingenlath expressed that this certainly adds to already high demand from regular customers, but that the order is already accounted for within its product roadmap. He did note, however, that "it will be a very uphill battle to make this all happen."
A secondary benefit for Polestar will be the opportunity to allow people to effectively sample its cars as a precursor to a potential purchase. Ingenlath mentioned that,
"The partnership with a global pioneer like Hertz will bring the amazing experience of driving an electric car to a wider audience, satisfying a broad variety of our mutual customers' short- and longer-term mobility requirements. For many of them it may be the first time they have driven an EV, and it will be a Polestar."
An advantage like this could be crucial in making significant inroads into the lucrative North American market, where competition is rife and many legacy brands tend to dominate.
Unfortunately, Polestar is still yet to become a publicly-traded company -- despite unveiling plans to go public via a SPAC merger with Gores Guggenheim, Inc. during the first half of this year. The deal won't go unnoticed by potential shareholders, however. This deal very much echoes that of the one signed with Tesla by Hertz only last year, and any comparisons with the outright market leader in EVs will surely be welcome news for Polestar.
For Hertz investors, the company's share price has already received more than an 8% boost today following the announcement. Shareholders will be undoubtedly happy to see the firm expand its fleet, and further enhancing its EV offerings will likely be lauded considering the current state of oil prices worldwide.
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