Tuesday, November 02, 2021
Tesla investors were already celebrating
Musk questions mega-order
When the car rental company Hertz announced an order for 100,000 Teslas, the Tesla share price exploded. But now it looks as if the boss of the car rental company leaned a little too far out of the window.
This stock market party was probably a little too hasty: Last week, a message from Hertz catapulted the Tesla share price into dizzying heights. The car rental company announced that it would order a total of 100,000 Tesla vehicles by the end of next year. A share of the electric car pioneer then cost more than 1,000 euros, and the company was valued at more than one trillion dollars on the stock exchange.
To put it into perspective: only a few companies like Apple, Amazon and Microsoft have managed this so far. A market capitalization of this size is almost twice as much as BMW, Daimler, Volkswagen, Toyota, General Motors (GM), Ford and Stellantis combined.
But the major order celebrated by investors is not in the towel. No contract has yet been signed, Tesla boss Elon Musk tweeted. He was responding to a fan club that had cheered the long-rising Tesla share price in a tweet and thanked him for it.
Apparently, when it announced, Hertz assumed that Tesla would get discounts on the large order – as is common in the industry. But Musk doesn’t want to know anything about that. “Demand for Teslas far exceeds production. That’s why we will sell Hertz cars at the same profit margin as (all) other customers,” he tweeted. “The order does not affect our business.”
The order would have a volume of around $ 4.4 billion (around 3.8 billion euros) if it consisted entirely of vehicles of the type of the cheapest Tesla car Model 3. Tesla offers the model from $ 44,000.
Great plans
Hertz had slipped into bankruptcy during the Corona crisis, but was saved by a group of investors in the summer. The purchase of the Teslas would be the company’s first major initiative since bankruptcy proceedings were closed. Hertz had stated that they wanted to build the largest e-car rental fleet in North America because of the strong customer interest in electric cars. From November on, Tesla’s Model 3 should be available in the USA, but also in some European cities.
In addition to the order, Hertz announced that it would install several thousand charging stations. “Electric cars are now mainstream,” said transition chief Mark Fields. With the order, more than 20 percent of the global Hertz rental car fleet will consist of e-cars. Whether the deal with Tesla will come about is, despite the full-bodied announcement, in the stars.
While the automotive industry as a whole has been suffering from the semiconductor shortage, shortage of containers as well as traffic jams at seaports and other bottlenecks in the supply chains for months, Tesla has so far coped with the burdens relatively well. In the third quarter, the company brought almost 241,400 vehicles to its customers, around 73 percent more than a year earlier. Production in the three months was just under 240,000 e-cars. The major Hertz order would represent around a tenth of Tesla’s current annual manufacturing capacity.