Tesla Model 3 electric vehicles at a Hertz airport location.
Photo by E.R. Davidson
Hertz says Tesla has already started delivering cars into its rental fleet, even though Tesla CEO Elon Musk tweeted Monday night that the automaker hasn’t yet signed a contract with the company.
Musk on Twitter said he’d like to “emphasize that no contract has been signed yet.” He also said the “Hertz deal has zero effect” on the automaker’s economics, as it will “only sell cars to Hertz for the same margin as to consumers.”
Lauren Luster, director of communications at Hertz, declined to discuss specific details of the agreement, but said the company remains “on plan” with its announcement last week to offer 100,000 Tesla electric vehicles by the end of 2022.
“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,” she said in an emailed statement. “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.”
Shares of Hertz during trading Tuesday morning reached a new 52-week high of $46 a share, up by 35%. Tesla’s stock was slightly down to less than $1,175 a share.
Tesla did not immediately respond for comment.
Investors have traditionally frowned upon automakers when they sell large amounts of vehicles to daily rental fleets. That’s because cars and trucks sold to rental companies are usually sold at a discount, with such deals used to reduce bloating inventories and increase their total vehicle deliveries.
Tesla hit a $1 trillion market cap for the first time a week ago after Hertz announced it would grow its fleet of battery-electric vehicles with “an initial order of 100,000 Teslas by the end of 2022.”
Interim Hertz CEO Mark Fields last week said the rental company started talking with Tesla “many months ago” about the purchase of the vehicles. He described it as a “great relationship” and part of Hertz’s move to lead rental companies in managing large fleets of EVs.
A commercial featuring seven-time Super Bowl champion Tom Brady, alongside parked Tesla Model 3 electric sedans in a Hertz garage, accompanied the announcement.
Two days after announcing the initial order of 100,000 Teslas, Hertz said it would make up to half of the cars available to Uber drivers to rent by 2023. The company said “if successful,” the program could expand to 150,000 vehicles over the next three years.
Hertz “pointed out that these ambitions could be affected by factors outside of its control, such as semiconductor chip shortages or other constraints.”
During the burgeoning coronavirus pandemic, Hertz filed for bankruptcy protection — but as travel rebounded somewhat and demand for rental vehicles picked up, investors from Knighthead Capital Management and Certares Management said they would take over the company.