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French philosopher René Descartes often theorized that pain and pleasure exist on a continuum – you can’t have one without the other. And Polestar, Volvo’s soon-to-be-spinned EV unit, can attest to that: its latest deal is a major win even if it hurts. Or, should we say, Hertz.

On Monday, the electric vehicle maker signed a major agreement with the car rental company, pledging to supply 65,000 cars over the next five years.

From race to production

First, let’s kick things into high gear in a quick history lesson. Polestar has its roots in the Swedish touring car racing scene of the mid-1990s. In 2009 it became an official partner of Volvo, designing both utility and racing vehicles. In 2015, Volvo (itself a subsidiary of Chinese multinational Geely) fully acquired Polestar. Two years later, it shifted entirely to electric vehicles, and in September 2021 Polestar announced plans to go public via a SPAC merger (expected later this year) at a $20 billion valuation.

The Hertz deal is a major milestone for the Swedish automaker, and the 65,000 unit order is more than double its 29,000 sales last year – and Polestar hopes to use it as a launch pad to catch up with leader Tesla ( which already signed a 100,000 unit contract with Hertz in October):

• Details of the deal are still undisclosed, but the entry-level Polestar 2 model sells for $49,000, meaning a full order value would be around $3.2 billion.
• By 2025, Polestar says it hopes to ramp up production to deliver 290,000 electric vehicles a year – a figure Tesla is currently achieving in less than three months, according to Bloomberg.

Red light, green light: For Hertz, which filed for bankruptcy in May 2020 (no need to step on the brakes and explain this one), the Polestar and Tesla deals mark two major milestones in its promise to offer the largest rental fleet. North American electric – and “one of the largest in the world.” Tesla’s deal with Hertz last year sent its stock price soaring, leading to its first-ever $1 trillion valuation. And at the latest, shares of Gores Guggenheim – the blank check company that Polestar plans to partner with – are at their highest level so far this year.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.