Tesla value tops $1 trillion after Hertz orders 1,00,000 cars

Consumer demand for electric vehicles is turning a corner in some major markets

Hertz said Monday that it would convert more than 20 per cent of its rental fleet to Tesla’s electric cars by the end of next year, an announcement that helped propel Tesla’s stock value beyond $1 trillion for the first time.

The order for 1,00,000 Teslas was a bold move for Hertz, which is emerging from bankruptcy, and a sign of growing momentum in the shift to electric vehicles.

And it was the latest fuel for Tesla’s skyrocketing share price, which gained nearly 13% to finish the day at $1,024.86, its first close above $1,000.

“Wild $T1mes!” Elon Musk, Tesla’s CEO, exclaimed on Twitter.

Also Read | As Tesla, Foxconn eye India's EV space, here are the major players

Hertz customers will be able to rent a Tesla Model 3 compact sedan in some major markets in the United States and Europe starting in early November. The company said that it planned to install thousands of chargers at its locations.

“Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest,” Mark Fields, Hertz’s interim CEO, who previously led Ford Motor Co., said in a news release.

Also Read | Mass adoption of EVs quite some time away in India

The deal could benefit both companies, said Michelle Krebs, an analyst with Cox Automotive.

“This is unique, and it’s really allowing Hertz to differentiate itself from other rental car companies,” she said. “For Tesla, it’s a great deal because it exposes Tesla’s EVs to a much wider array of consumers.”

For Tesla, the trillion-dollar valuation is the latest sign of how much it has disrupted the auto industry, even as it struggled to make money for nearly two decades. Its market capitalization is greater than those of General Motors, Toyota, Ford, Volkswagen, BMW, Honda and several other automakers combined.

Also Read | Tesla shows progress on profit as investors seek perfection

Just four years ago, Tesla was mired in production difficulties at its plant in Fremont, California. And as recently as March 2020, as the coronavirus pandemic hit the United States, its share price was barely above $70.

A large order from Hertz could help Tesla balance production and manage a shift in demand. In recent quarters, sales of the Model 3 have declined and have been outstripped by those of the Model Y hatchback.

Watch the latest DH Videos here: