Model 3
Nicolas Caballero's picture

Tesla Already Delivering Cars to Hertz, Despite Musk Saying Contract Is Not Signed Yet

As per the latest information available, Hertz says deliveries of Tesla cars into its rental fleet are already occurring, despite a tweet Monday night by Elon Musk that the automaker has not signed a contract with the company.
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In that regard, social media user Gary Black tweeted "…Do $TSLA investors really believe the Hertz deal is at risk (-2.1% today)? No company would spend millions on national ads with Tom Brady’s endorsement and feature TSLAs in their ads if there wasn’t a deal. The market often gets TSLA wrong in the short run.". For those who are not familiar with Tom Brady (mostly non-americans, I would say...), he is widely considered to be the greatest quarterback of all time in American Football. Thomas Edward Patrick Brady Jr. (born August 3, 1977) is a quarterback for the Tampa Bay Buccaneers of the National Football League (NFL). He spent his first 20 seasons with the New England Patriots, where he was a central contributor to the franchise's dynasty from 2001 to 2019.

There have been many interesting reactions to that tweet, like this user who said "...Good thing Tesla isn’t just a car company. If that’s the lens you’re looking at this through that’s your mistake. OEMS have to go through a lot of pain and burn down their entire business model to turn profitable with EV’s. They’re frunked.". In a reply to that tweet, another user said "…It's a done deal. Hertz is already backed into a corner with announcement and ads with Tom Brady. They are just trying to get a bit more concession from Tesla (in forms other than price discount)."

Hertz

According to CNBC, Hertz says Tesla has already started delivering cars into its rental fleet, even though Elon Musk tweeted Monday night that the automaker hasn’t yet signed a contract with the company. 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.

But what are the facts, and what exactly is all this buzz about? If we go back a week, during a CNN interview with Julia Chatterley, Dara Khosrowshahi, UBER CEO, was asked, among many other things, how confident he was about actually having 50 thousand drivers in the US by 2023, in order to take advantage of the deal with Hertz (the Tesla Model 3 deal), to which he basically answered "… we´re quite confident; we actually have other electric cars on the network, and consistently we see significant demand for these kinds of cars." As a reminder, half of the Hertz order for 100K Teslas are destined to Uber rentals.

Uber

He also added that "...like I always say, climate change is a team sport, and our drivers want to help, so we do think that based on the demand that we´ve seen for electric vehicles on our network -and Tesla is obviously a great brand - it´s a great product; I think if we make Teslas available, there´ll be plenty of takers."

In the same interview Mark Fields, Hertz interim CEO, commented on the subject: " … I would just say that part of our agreement is that, for this program, if successful (and we believe it will be) that over the next 3 years this could grow to 150 thousand Teslas that can be provided by Hertz to Uber as well."

"This commitment with Uber program, ... and when it´s successful, is up to 150 thousand vehicles, and clearly ought to be reflected in our future orders for Tesla, just as would, you know, orders for other OEMs that are going to be providing electric vehicles to the Market place." As for any discount Hertz might have benefited from in the deal with Tesla, Mark declined to comment or give any additional info.

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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.” Shares of Hertz during trading Tuesday morning reached a new 52-week high of $46 a share, up 35%. Tesla’s stock was slightly down to less than $1,175 a share.

Nico Caballero is the VP of Finance of Cogency Power, specializing in solar energy. He also holds a Diploma in Electric Cars from Delft University of Technology in the Netherlands, and enjoys doing research about Tesla and EV batteries. He can be reached at @NicoTorqueNews on Twitter. Nico covers Tesla and electric vehicle latest happenings at Torque News.


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