Tesla soars 8% to a nearly $1 trillion valuation after Hertz orders 100,000 Model 3 vehicles
Hertz/Photo by E.R. Davidson
- Tesla soared as much as 8% to record highs on Monday after Hertz said it ordered 100,000 Model 3 vehicles.
- Hertz will operate the largest EV rental fleet in the world when it receives the vehicles in 2022.
- The vehicle purchase by Hertz will reportedly cost $4.2 billion, suggesting Tesla offered little discounts.
Shares of Tesla jumped as much as 8% to new all-time-highs on Monday after Hertz said it acquired 100,000 Model 3 vehicles from the company.
That means by the end of 2022, a Tesla Model 3 will be an option for car-renters at Hertz locations across the country and in select cities in Europe.
Hertz's purchase is reportedly worth $4.2 billion for Tesla, suggesting few discounts were offered to Hertz in the deal. Rental vehicle companies are usually able to secure a sizable discount from automakers when purchasing such a large fleet of new vehicles.
Those usual discounts were likely off the table for Hertz given that Tesla is struggling to keep up with demand for its vehicles due to production shortfalls hampered by supply chain disruptions and semiconductor shortages.
Wedbush analyst Dan Ives said Tesla getting an order of this magnitude "highlights the broader EV adoption underway in our opinion as part of this oncoming green tidal wave now hitting the US," according to a Monday note.
Hertz is now set to operate the world's largest EV rental fleet just months after it emerged from chapter 11 bankruptcy. The rental company said it hired NFL quarterback Tom Brady to headline a campaign highlighting the rollout of its Tesla-powered electric fleet, which will represent 20% of its overall vehicle fleet.
"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," Hertz interim CEO Mark Fields said.
The move from Hertz adds to the momentum building for Tesla stock in recent weeks. The stock benefited from record profits and revenue revealed in its third-quarter earnings report last week and is now within reach of a $1 trillion valuation. Tesla's market valuation stood at about $975 billion in Monday trades.