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Tesla's stock soars on US$4.2 billion Hertz deal, European sales top reports

Red Model 3 (image: Tesla)
Red Model 3 (image: Tesla)
Tesla's shares continue their upward march on reports that Hertz ordered 100,000 Model 3 cars for its fleet, while Tesla became the first electric car company to top European sales last month.

If you woke up to see your Tesla stock portfolio shooting up, it's because Bloomberg's sources privy to the plans of rental car giant Hertz tipped it has ordered no less than 100,000 Model 3 vehicles for its fleet. The deal is deemed to be worth in the vicinity of US$4.2 billion and would be the largest mass rental fleet electrification so far, explaining why Tesla's shares were up 4% in pre-market trading today.

Hertz just emerged from bankruptcy protection due to the coronavirus pandemic that grounded its cars worldwide last year and is now determined to preempt upcoming green regulations by going electric. It will take Hertz 14 months to fulfill its bulk purchase, but the first Model 3 cars should be available to rent in North America and some European countries as soon as November, tip Bloomberg's industry insiders.

With a worldwide fleet of half a million vehicles, the 100,000 Teslas would represent a  significant shift in Hertz's product mix under the new Knighthead Capital Management ownership. The deal appears architectured to lock out competitors from a similar move by booking more than 10% of Tesla's production capacity for the foreseeable future.

Knighthead bought the distressed Hertz assets for US$6 billion back in May, and the rebound in travel over the summer has already netted it more than US$5 billion in profit so far. Hertz currently trades as an OTC stock, waiting to be listed back on the Nasdaq, but if this latest Tesla Model 3 fleet remodeling rumor holds water, Hertz has every chance to become even more of a meme stock than it currently is. As for Tesla, this is just the next notch on its market success belt, after it became the first company with an electric car to top the European sales rankings last month, beating Renault and VW to the punch.

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Bloomberg (1),(2)

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> Expert Reviews and News on Laptops, Smartphones and Tech Innovations > News > News Archive > Newsarchive 2021 10 > Tesla's stock soars on US$4.2 billion Hertz deal, European sales top reports
Daniel Zlatev, 2021-10-25 (Update: 2021-10-25)