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• The contradictory statement from the two companies forced Tesla’s share to drop more than 5%
• Musk said as Tesla has demand for more cars than it can produce, the deal with Hertz does not affect the company’s economics
Rental car company Hertz Global Holding Inc, on Tuesday, said it’s already receiving cars under its deal with Tesla Inc. The deal is to add 100,000 EVs through 2022. However, Elon Musk said there had been no signed contract between the companies yet.
The contradictory announcement came more than a week after the car rental firm announced a massive deal with the electric car company, which helped Tesla cross the $1 trillion market cap.
The disagreement
Musk, on late Monday, tweeted, “If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet.”
However, after the Tesla CEO’s tweet, Hertz, in an emailed statement to Bloomberg, said that “Deliveries of the Teslas already have started. We are seeing very strong early demand for Teslas in our rental fleet, which reflects market demand for Tesla vehicles.”
“As we announced last week, Hertz has made an initial order of 100,000 Tesla electric vehicles and is investing in new EV charging infrastructure across the company’s global operations,” the car rental company said.
Hertz also reiterated that it had made an order to Tesla on October 25 to buy 100,000 Model 3s that will comprise more than 20% of its global car rental fleet and its plan to invest in new EV charging infrastructure across its global operations.
The deal that soared Tesla’s market cap
The deal in question was supposed to be the single-largest electric vehicle purchase agreement and could add about $4.2 billion to Tesla’s revenue, Bloomberg reported first, citing people familiar with the matter.
Later, Hertz’s interim CEO Mark Fields told Reuters the order would primarily include the cheapest Tesla car, the Model 3 sedan, which starts at about $44,000; the order could be worth about $4.4 billion if the entire order were for the mass-market sedan.
Although, Musk tweeted that as Tesla has demand for more vehicles than it can produce, the deal with Hertz “has zero effect on our economics,” shares of the EV maker fell more than 5% to $1,146 in premarket trading.
Tesla surged nearly 33% during the past week following the news of the biggest-ever order to give the EV-maker a market valuation above $1 trillion.
The car rental company, which trades over the counter ahead of a re-listing on the Nasdaq Stock Market, climbed 38% through Monday since it announced the deal last week, pushing the market value of the company to about $16.1 billion, which just recovered out of bankruptcy four months ago.
Picture Credit: InsideEVs