A New Polestar in the EV Space

By Glenn Dyer | More Articles by Glenn Dyer

EV demand is showing no sign of easing and that means rising demand for batteries and for minerals like the copper, lithium zinc, aluminium and nickel Australia is producing in increasing amounts.

Remember how the news that a 100,000-vehicle contract for its electric vehicles (EVs) from struggling rent-a-car company, Hertz, boosted the fortunes and share price of Tesla in late 2021?

That saw the company’s shares surge to more than $US1 trillion for the first time and helped reverse what was looking like a nasty slide in Tesla’s fortunes (and boosted the value of CEO Elon Musk’s stake in Tesla by $US36 billion in a day).

It turned out there was no contract when the deal was announced, according to the Tesla CEO, but Hertz was adamant that a deal had been done. Hertz has been receiving Model 3 vehicles from earlier this year.

But if there was something a little initially odd about the Tesla deal, something far firmer and just as symbolic was revealed this week – another Hertz order for EVs – this time 65,000 units over the next five years from soon-to-list Swedish maker Polestar.

Perhaps the main significance of this deal is that it again sends a huge message that renewables are here to stay and will grow dramatically – albeit oddly at times.

The agreement will see Hertz buy battery models EVs for use in Europe, the US and Australia by 2027.

Although neither company put a value on the deal, the entry level Polestar 2 begins at $US49,000, giving a total order value of about $US3.2 billion if Hertz pays full price for basic-level models (it’s won’t).

The value of the Hertz -Tesla deal was put at $US4.2 billion in late 2021 values. Since then, Tesla car prices have been lifted twice by more than 10%.

Hertz had an average of just under 500,000 vehicles in its fleet last year. Hertz filed for bankruptcy during the pandemic because of a collapse in demand and part of its recovery story is a pledge 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 totalled 29,000.

Polestar is backed by Volvo, and its Chinese parent Geely currently produces its battery models at a plant in Chengdu, China, and is increasing deliveries. (Does this make Polestar in reality a Chinese maker, or just Chinese-owned?)

EV sales in Europe moved past those of diesel in Europe in 2021 and are projected to extend the lead this year sales as the price of petrol and diesel soar in the wage of the Putin-directed invasion of Ukraine and the boost that gave to oil and petrol prices.

Norway leads the world in EV penetration where currently more than 80% of new cars sold are battery-driven.

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 in the statement.

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

Meanwhile Chinese carmaker BYD says it stopped making internal combustion engines for all but its plug-in hybrid models in March. BYD sold more 100,000 vehicles in March – roughly 53,000 were battery powered EVs and around 50,000 plug ins (collectively referred to as NEVs in China or new energy vehicles).

BYD is China’s largest EV maker (and has been backed for 13 years, incidentally by Warren Buffett’s Berkshire Hathaway which 7.9% of the whole company via a 21% holding in the Hong kong listed shares of the company).

Buffett paid $US232 million for the stake in 2008, just before the GFC. At yesterday’s price in Hong Kong that stake was worth more than $US7.9 billion.

There are lot of ways to make money in renewables, but being patient helps a lot.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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