Elon Musk says Tesla hasn’t signed with Hertz yet

Elon Musk, CEO of Tesla, stands at the Tesla Gigafactory during a press conference.

Patrick Plehl | painting alliance | Getty Images

Tesla CEO Elon Musk said Monday night that his electric car company has yet to sign a contract with rental car company Hertz. The tweet from Musk clearly contradicted a previous announcement and advertisement posted by Hertz on October 25.

Tesla is known to hit a $ 1 trillion market cap for the first time a week ago after Hertz announced it will expand its battery-electric vehicle fleet with “an initial order of 100,000 Tesla by the end of 2022.”

The announcement was accompanied by a commercial featuring seven-time Super Bowl champion Tom Brady next to parked Tesla Model 3 electric sedans in a Hertz garage.

CNBC reached out to Hertz and Tesla for more information on Monday night. None of the companies responded prior to publication.

Hertz interim CEO Mark Fields said last week that the car rental company began negotiations with Tesla “months ago” to buy cars. He described it as a “great relationship” and part of Hertz’s move to lead car rental companies in the management of a large fleet of electric vehicles.

“It’s about relationships. From this point of view, the relationship with Tesla is very important to us, but … we also have relationships with all automakers, and we want to help them when they present their electrified vehicles, ”Fields said during an interview. on CNBC “Squawk Box”.

Fields, the former Ford CEO, called the move a “strategic discussion” to help automakers that started with Tesla and continued with other companies. “We did it with Tesla and we intend to do it with all automakers,” he said.

Investors have traditionally frowned upon automakers when they sell large numbers of vehicles to their fleet. This is because cars and trucks sold to rental companies are usually discounted, and such deals are used to reduce bloated inventory and increase their overall vehicle supply.

However, shareholders and analysts have reacted positively to Tesla’s idea of ​​selling 100,000 all-electric Hertz vehicles. The move was taken as a sign that battery electric vehicles are becoming more popular.

For example, Dan Ives of Wedbush Securities wrote in a bullish Tesla note on October 26:

“The Hertz deal will, in our view, be seen as a watershed moment for the EV industry, as Tesla’s 100K Model 3 / $ 4B + deal signals a more massive adoption of EVs as only 2% of cars in the US are driven by EVs today. compared to 10% + in China with rapid growth on the horizon. We believe this is the biggest transformation in the automotive industry since the 1950s, with more consumers moving towards electric vehicles in the coming years. ”

Since Tesla closed on Oct.22 until the announcement, its shares have surged about 33%.

Musk said last week that it was “weird” the news had such a big impact on the company’s valuation.

Musk’s equity, which owns about 20% of Tesla, has risen with the share price of the electric car maker. He is now the richest man in the world.

Other shareholders inside and outside the company have benefited too, including longtime bulls like Ron Baron, Tesla employees who over time earned and transferred options, and Musk. other board members

Two days after announcing the initial order for 100,000 Tesla, Hertz said it will provide up to half of the cars available for rent by Uber drivers by 2023. The company said that “if successful,” the program could expand to 150,000 vehicles over the next three. years.

Hertz “indicated that this ambition could be influenced by factors beyond its control, such as a shortage of semiconductor chips or other constraints.”

During the growing coronavirus pandemic, Hertz filed for bankruptcy protection, but as travel recovered somewhat and demand for rental cars increased, investors from Knighthead Capital Management and Certares Management said they would take over the company.

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