About a week ago the world reported that rental company, Hertz, had signed a deal to buy 100,000 Tesla Model 3s to bolster its EV fleet of vehicles. Turns out the deal’s not sealed yet, according to a recent tweet by Tesla CEO Elon Musk.
There are a few things that make this story interesting: 1) the unconfirmed sale of 100,000 Tesla vehicles pushed the company’s market cap up into the $1 trillion bracket, 2) Hertz was almost bankrupt just a few months ago, and 3) Hertz already rolled out a marketing campaign advertising its Tesla fleet featuring Tom Brady.
Hertz and its Phantom Teslas
On Monday 1 November, Musk tweeted: “If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet.”
If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet.
Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers.
Hertz deal has zero effect on our economics.
— Elon Musk (@elonmusk) November 2, 2021
In the same vein, the CEO reiterated that the rental car company will acquire all of the Model 3s at the same price any consumer would pay. If the tweet is to be believed, that means Tesla isn’t offering Hertz a bulk discount.
Musk couldn’t understand how news of the large order shifted the company’s valuation. But it clearly did.
To be clear, cars sold to Hertz have no discount. Same price as to consumers.
— Elon Musk (@elonmusk) October 26, 2021
Following reports of the deal, Wedbush analyst Daniel Ives said that this “… will be viewed as a tipping point for the EV industry, as the 100,000 Model 3 EV supply deal valued at over $4 billion speaks to more mainstream adoption for EVs,” according to Business Insider.
“We believe this is the biggest transformation to the auto industry since the 1950’s (sic) with more consumers heading down the EV path over the coming years.”