Tesla Closing in on a Trillion Dollar Market Cap After Rental Car Company Hertz Orders 100,000 Model 3 Sedans
【Summary】Electric automaker Tesla is closing in on a trillion dollar market capitalization after rental car company Hertz Global Holdings placed an order for 100,000 Model 3 sedans that will be delivered over the next 14 months. The Model 3s will be available to rent at Hertz rental car locations in major U.S. markets and parts of Europe starting in early November.
Electric automaker Tesla is closing in on a trillion dollar market capitalization after rental car company Hertz Global Holdings placed an order for 100,000 Model 3 sedans. The massive order from Hertz is part of its plans to electrify its rental car fleet. The Model 3 sedan will be delivered to Hertz over the next 14 months.
The first Model 3 sedans will be available to rent at Hertz rental car locations in major U.S. markets and parts of Europe starting in early November, the company said in a statement.
Customers who rent a Tesla Model 3 will have access to 3,000 Tesla supercharging stations throughout the U.S. and Europe. Hertz is also building its own EV charging infrastructure to support its plans to add electric vehicles to its fleet and transform into a mobility company.
"Electric vehicles are now mainstream, and we've only just begun to see rising global demand and interest," said Hertz interim CEO Mark Fields. "The new Hertz is going to lead the way as a mobility company, starting with the largest EV rental fleet in North America and a commitment to grow our EV fleet and provide the best rental and recharging experience for leisure and business customers around the world."
The order from Hertz is the single-largest purchase ever for fully-electric vehicles and represents around 10% of Tesla's annual production capacity. It also represents around $4.2 billion of revenue for Tesla, according to people familiar with the matter that spoke to Bloomberg. The people declined to be identified because the information is private.
The news of the deal resulted in Tesla's stock soaring by 7%, reaching a record high over $970 a share. As of Monday morning, Tesla's market cap was hovering around $965 billion.
Normally rental car companies receive deep discounts from automakers for buying so many vehicles at once, but Hertz is paying Tesla full price for the Model 3s. But the Model 3's lower maintenance costs versus its gas-powered vehicles will help generate more profit with electric vehicle rentals.
Hertz will offer a premium rental experience for the Tesla EVs. This includes digitized guidance to educate customers about the electric vehicle. Hertz also plans to expedite EV rental booking process via its mobile app.
Hertz itself recently emerged from bankruptcy after the pandemic caused a sharp drop in travel which decimated the company's rental car business. Hertz filed for bankruptcy protection in May 2020 at the height of the pandemic.
In May of this year, Investment firms Knighthead Capital Management, Certares Management and others, won a $6 billion bid to take over Hertz in its bankruptcy reorganization. The company emerged from bankruptcy in June and its share price has soared since then.
Hertz shares are up over 7% on Monday, reaching $26.50 after the announcement. The company's market cap is now $12.49 billion.
resource from: Bloomberg
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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