DETROIT – Hertz announced Monday that it will purchase 100,000 Tesla electric vehicles, one of the largest battery-powered car purchases in history and the latest evidence of the country’s increasing commitment to EV technology.
News of the transaction sparked a rally in Tesla shares, driving the automaker’s market value above $ 1 trillion for the first time.
The purchase by one of the world’s leading car rental companies reflects its confidence that electric vehicles will gain acceptance among environmentally conscious consumers as an alternative to vehicles with petroleum-burning combustion engines.
In an interview with The Associated Press, Mark Fields, Hertz’s interim CEO, said Teslas are already arriving at the company’s locations and will be available for rent from November.
Hertz announced in its announcement that it would complete the purchases of the Tesla Model 3 small car by the end of 2022. It also said it would build its own electric vehicle charging network to produce the largest rental fleet of electric vehicles in Northern America.
Fields wouldn’t say how much Hertz is spending on the order. But he said the company had ample capital and a healthy balance sheet after emerging from bankruptcy protection in June.
The deal is likely worth around $ 4 billion as each Model 3 has a base price of around $ 40,000. It also tops an individual company’s list of EV orders. In 2019, Amazon ordered 100,000 electric delivery vans from Rivian, a start-up maker of electric vans, pickups, and SUVs. Amazon is an investor in Rivian.
The Hertz deal drove Tesla stock up nearly 13% to a record closing price of $ 1,024.86 and drove the total market value of the world’s most valuable automaker to just over $ 1 trillion. According to Forbes, the wealth of CEO Elon Musk, the world’s richest person, grew 11.4% to $ 255.8 billion.
In his interview with the AP, Fields made it clear that electric vehicles are increasingly moving into the mainstream and that Hertz intends to be a leading provider of electric vehicles for rental customers. He pointed to surveys showing that consumer interest in electric vehicles has increased dramatically over the past five years.
“More are ready to try and buy,” he said. “It’s pretty breathtaking.”
Fields said Hertz, which is based in Estero, Florida, is also talking to other automakers about purchasing additional electric vehicles as it expands its EV fleet as more models hit the market.
Hertz is also investing in its own charging network. Fields said it has plans for 3,000 chargers in 65 locations across the U.S. by late 2022 and 4,000 by late 2023. Many of the locations will be in Hertz locations such as airports, while others will be in suburban areas.
Customers could also use Tesla’s own large charging network for a fee, Fields said. The company has a network of around 25,000 chargers worldwide.
Fields didn’t want to say how much Hertz will charge to rent the Teslas or whether they would be more expensive to customers than gas-powered vehicles.
Daniel Ives, a technology analyst with Wedbush Securities, wrote in a notice to investors Monday that Hertz’s appointment is “a big feather in the ceiling” for Tesla and shows that widespread electric vehicle adoption “as part of this impending green “A tidal wave is underway and hits the USA”
China and Europe were ahead of the US in electrifying vehicles. But demand in the United States is accelerating, according to Ives, with Tesla at the helm, followed by startups Lucid Motors, General Motors, Ford and others pursuing a potential $ 5 trillion market opportunity over the next decade.
In an interview, Ives said he expected other rental car companies to follow Hertz’s lead.
“It’s also a wake-up call for the rest of the industry,” he said.
Ives suggested that the deal will help Tesla and other manufacturers by bringing the experience of driving electric vehicles to thousands of consumers who otherwise might not have.
“It’s the ultimate test drive,” he said. “For a company that doesn’t normally market, this is the best branding and marketing deal they’ve ever made,” he said of Tesla.
Hertz’s contract could also help alleviate a nationwide shortage of rental cars, he said. Automakers have reduced production and sales to rental car companies because of a global shortage of computer chips.
However, Ives said he doesn’t expect Hertz to receive significant numbers from Teslas until the automaker’s new factory near Austin, Texas begins production late next year.
Hertz will likely charge customers more to rent the Model 3 compared to traditional internal combustion engine vehicles, Ives noted.
Hertz Global Holdings Inc. filed for bankruptcy protection in May 2020, two months after the coronavirus outbreak across the country. It was one of the first major corporations to be affected by the pandemic as infections soared and restricted global travel for both businesses and vacationers.
In October, Hertz Fields appointed a former CEO of Ford Motor Co. to be its interim boss.
Shortly after Hertz’s announcement on Monday, the National Transportation Safety Board released a letter from its chairmen criticizing Tesla for failing to respond to recommendations resulting from several fatal accident investigations using the company’s semi-automated driver assistance system, Autopilot. The agency recommended Tesla four years ago that it limit the uses of its autopilot system and better monitor drivers to make sure they are paying attention.
– The Associated Press
