Tesla stock rose after the news about the deal, driving its market value to $1 trillion for the first-time.
One of the most respected rental car companies in the world has purchased an electric vehicle to show its belief that electric vehicles will soon be accepted by environmentally conscious consumers.
Mark Fields, interim CEO of Hertz, stated that Teslas have already arrived at company sites and will be available for rent starting in November.
Hertz announced that it would complete its purchase of the Tesla Model 3 small cars before the end of 2022. As it strives for the largest fleet of electric cars in North America, Hertz also stated that it will create its own charging network for electric vehicles.
Fields would not say how much Hertz spends on the order. He said that the company had sufficient capital and a healthy financial position after it emerged from bankruptcy protection in June.
Because each Model 3 comes with a base price around $40,000. The deal is likely to be worth approximately $4 billion. It is also the highest-ranked electric vehicle order by any single company. Rivian is a startup maker of electric pickup trucks, SUVs, and vans. Amazon purchased 100,000 electric delivery vans in 2019. Rivian is owned by Amazon.
Tesla shares rose nearly 13% to $1,024.86, a record closing price. This order pushed Tesla's market value to just above $1 trillion. Forbes reports that Elon Musk's wealth, which is the richest person on the planet, increased 11.4% to $255.8billion.
Fields stated in an interview with the AP that electric vehicles are becoming more mainstream. Hertz plans to be a major provider of EVs for rental customers. He cited surveys that show electric cars have been a popular choice for consumers over the past five year.
He said, "More people are willing to buy" It's quite stunning.
Fields stated that Hertz, which is located in Estero in Florida, is also in talks with other automakers about purchasing additional electric vehicles to expand its EV fleet.
Hertz is also investing in its own charging network. Fields stated that Hertz plans to install 3,000 charging stations in 65 locations across the United States by 2022, and 4,000 by 2023. He said that many of the locations will be located at Hertz locations, such as airports. Others will be in suburban areas.
Fields stated that customers would also be able use Tesla's large charging network for a small fee. There are approximately 25,000 charging stations worldwide.
Fields declined to disclose the exact price Hertz would charge for renting Teslas, or whether customers would pay more for them than they are for gas-powered vehicles.
Wedbush Securities technology analyst Daniel Ives wrote Monday that Hertz's order is a "major feather" for Tesla. It also shows that there is a wide adoption of electric cars as part of the "oncoming green tsunami hitting the U.S."
China and Europe are ahead of the U.S. in vehicle electrification. Ives pointed out that the United States is seeing a rapid increase in demand for vehicle electrification. Tesla leads the charge, followed by General Motors, Ford, Lucid Motors and other startups.
Ives stated in an interview that he expects other rental car companies will follow Hertz's example.
He said, "It's also a wake up call for the rest"
Ives stated that the deal will benefit Tesla and other manufacturers because it will give thousands of people the opportunity to drive electric cars, something they might not have otherwise.
He said, "It's an ultimate test drive." He said that Tesla was the best marketing and brand deal he'd ever seen for a company that doesn’t market.
He said that Hertz's order could also help to alleviate the nationwide shortage of rental vehicles. Due to a shortage of computer chips worldwide, automakers have cut production and sold fewer rental cars.
Ives stated that Hertz won't receive significant numbers until Hertz's new Austin factory, Texas, opens production late next year.
Ives pointed out that Hertz will likely charge customers more for the Model 3s than they would for conventional vehicles with combustion engines.
Hertz Global Holdings Inc. filed bankruptcy protection in May 2020 two months after the outbreak of the coronavirus across the country. It was one of the first major corporations to succumb to the pandemic. The epidemic caused a surge in infections that shut down international travel for vacationers and businesses.
Fields, who was a former Ford Motor Co. CEO and chief executive, was appointed interim chief executive by Hertz in October.
The National Transportation Safety Board issued a letter Monday from its chairwoman, criticizing Tesla for not responding to several recommendations that were made in fatal collision investigations involving its Autopilot partially automated driver assistance system. Four years ago, the agency recommended that Tesla restrict the range of its Autopilot system and that it monitor drivers more closely to ensure they are paying attention.