By
Svetlana Soroka
April 18th, 2024
Elon Musk recently revealed that despite the 100,000 Tesla-vehicle order news from car rental Hertz, there is no official contract at the moment.
According to Elon Musk, Tesla Inc (NASDAQ: TSLA) is yet to sign a contract with Hertz Global Holdings Inc (NYSE: HTZ) for the 100,000 Tesla vehicles the car rental company recently ordered. Musk’s latest revelation on the deal between Tesla and Hertz seems to contradict a prior announcement about the deal.
Tesla made headlines last week when it hit $1 trillion in valuation. This was after Hertz reportedly tapped the electric automaker to supply an initial 100,000 vehicles by the end of 2022. Hertz is one of several automobile-centric companies (alongside Uber) facing regulatory pressure to adopt more electric vehicles. Tesla stock has surged by 33% since its October 22nd close before the announcement.
On October 25th, Hertz released a commercial featuring Tom Brady, a multiple Super Bowl champion, alongside a parked Tesla Model 3, inside a Hertz garage. As of press time, neither Tesla nor Hertz have provided further clarifications.
Before Elon Musk Assertion, Hertz Interim CEO Expressed Enthusiasm About the Tesla Deal
According to Mark Fields, the interim CEO at Hertz, his company began dialoguing with Tesla on the vehicle purchase several months back. Furthermore, Fields expressed enthusiasm at the collaborative effort between both companies, calling it a “great relationship”. In addition, he also stated that the development underscores Hertz’s commitment to set the tone for rental companies – in managing large EV fleets. Fields emphasized the power of relationships in business as the common denominator upon which to build other things. Speaking with CNBC’s “Squawk box”, the interim Hertz CEO (and former Ford CEO) said:
“This is about relationships. From that standpoint, the Tesla relationship is very important to us, but … we also have relationships with all of the automakers, and we want to help them as they introduce their electrified vehicles.”
Fields suggested that Hertz deciding to partner with Tesla was a strategic move by the car rental company. He said that Hertz intended to also reach out to other car-manufacturing companies down the stretch. As he put it, “We’ve done that with Tesla and our intent is to do that with all of the automakers.”
Even Investors Seem to Be in Favor of the Deal
Historically, investors usually do not favor automakers selling large amounts of vehicles to daily rental fleets. This is because the car companies usually sell the products at a discount in a bid to achieve a number of objectives. The major objective is usually to trim down excess inventories as well as increase the total delivery of vehicles. Mostly, this objective favors the financial bottom-line. However, in the case of Hertz, Tesla investors – as well as analysts – do not seem to mind. Instead, they choose to view the sale of 100,000 vehicles to the car rental as a sign that electric-hybrid cars are becoming more mainstream.
Musk admitted last week that it was strange how impactful the news was on Tesla’s valuation. The billionaire owns about 20% of Tesla, causing his net worth to increase alongside Tesla’s share price. He is currently the world’s richest person.