Nov 3, 2021
Elon Musk Casts Doubt on Deal with Hertz
Recently, a press release from Hertz created hype and excitement over whether the rental company had placed an order for 100,000 Tesla Model 3s for its rental fleet. More recently, however, Elon Musk had tweeted that the order is far from firm, stating that “no contract has been signed yet.”
The rental car company’s statement announced that it made “a significant investment to offer the largest EV rental fleet in North America — which includes an initial order of 100,000 Tesla’s by the end of 2022.” This release, with other good news about the company’s sales trhoguhout Europe on top of it, could possibly have pushed investors to drive Tesla’s value over the $1 trillion mark.
“If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet,” Musk stated. “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’s tweet came in reply to a Twitter user — “Tesla Silicon Valley Club” — who was thanking Tesla’s founder for the company’s recent stock price surge. Musk appeared to want to sour some of that excitement, however, revealing that any Hertz deal would not have an impact on the company’s sales and bottom line going forward.
Hertz had technically never stated that it actually signed a contract or purchase order for the vehicles. The phrase “an initial order of 100,000 Tesla’s by the end of 2022” could be interpreted to mean that the order itself and not the vehicle deliveries will happen at the end of 2022. Tesla itself never responded to the initial news.
Hertz left bankruptcy four months ago after being purchased by distressed-debt firm Knighthead Capital Management and other firms for $6 billion. As such, announcing a purchase of 100,000 EVs valued at around $4.2 billion obviously raised eyebrows.
“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.”
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