Hertz said that, starting in early November and expanding through the end of the year, customers will be able to rent a Tesla Model 3 at airports and other locations in major U.S. markets and some cities in Europe.
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became the latest U.S. company to cross the $1 trillion milestone in market value as its stock price has more than doubled in the past year on surging sales and rising profit.
Helping Tesla cross the mark Monday was news that
had ordered 100,000 vehicles from the electric vehicle maker to stock its rental-car fleet, a major bulk purchase that could help the car company get more of its cars into the hands of mainstream consumers.
In crossing the $1 trillion mark, Tesla joins
was part of the group, though its share price has since retreated. Tesla, which last week posted its third consecutive quarter of record profit, is now valued more than the next nine largest auto makers by market cap.
Tesla’s stock hit an intraday high of $998.74, giving it a market value of $1.004 trillion. The stock has since slid to $994.48, up 9.3% on the day. Any close above $995.753 would put it above the milestone.
The Tesla order is part of a broader effort by Hertz to give customers more battery-powered options on rental-car lots.
The Estero, Fla., company said that starting in early November and expanding through the end of the year, Hertz customers will be able to rent a Tesla Model 3 at airports and other locations in major U.S. markets and some cities in Europe.
Electric vehicles will comprise more than 20% of the company’s global fleet with the current order, Hertz said Monday. The rental-car company said it introduced electric vehicles into its fleet in 2011.
Tesla’s stock surged around 7% in Monday morning trading, lifting the company’s shares to an intraday high of $979.80.
The order represents a major chunk of Tesla’s annual production volume, which has been growing in recent years.
The electric-car maker produced more than 509,000 vehicles last year, delivering about half a million of them globally in 2020, according to company filings.
Analysts expect those numbers to continue climbing as the company aims to start making vehicles at two new factories this year. Based on its deliveries through September, it is in a position to deliver nearly 900,000 vehicles to consumers in 2021 and analysts forecast shipments to rise to 1.4 million in 2022 as the new factories start cranking out vehicles.
The purchase, which would make hot-selling Teslas available to rental customers, could also help Hertz elevate its profile as it anticipates relisting on a major stock exchange by the end of the year. Hertz shares, which currently trade over the counter, rose more than 7% to $26.45.
Hertz said it is also installing thousands of electric-vehicle chargers in its network. Those who rent a Tesla Model 3 will have access to 3,000 Tesla supercharging stations in the U.S. and Europe, the company said.
Hertz said it expects a combination of level 2 and DC fast charging in about 65 markets by the end of 2022 and more than 100 markets by the end of 2023.
“Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest,” said
Hertz’s interim chief executive. Mr. Fields, a former Ford Motor Co. CEO, took the role earlier this month.
Financial terms of the deal between Hertz and Tesla weren’t provided. Based on list prices, the cost to Hertz would top $4 billion; however, historically it is common for such bulk orders to include a discount for the rental-car company.
In mid-October, Tesla CEO Elon Musk turned his first European Gigafactory near Berlin into a fairground where visitors could tour the facility. The project faced some delays and local resistance but Musk said the company expects to start production in November. Photo: Patrick Pleul/Associated Press
Hertz is making the investment after emerging from bankruptcy under new ownership. It filed for bankruptcy in May 2020 as the debt-laden company suffered from a collapse in reservations.
As part of its restructuring, Hertz exited bankruptcy with more $5.9 billion in new equity capital, a large portion of which was raised by new owners Knighthead Capital Management LLC and Certares Management LLC. At the end of June, it had $1.82 billion in cash and cash equivalents, according to company filings.
The rental-car firm is looking to raise more capital through a stock offering planned for the fourth quarter of this year. Hertz, which revealed the offering earlier this month, said the terms haven’t yet been determined. It intends to list its common stock on the Nasdaq under its pre-bankruptcy symbol “HTZ.”
The expansion into electric vehicles is part of what the company defines as “the new Hertz,” which focuses on electrification, shared mobility and a digital-first experience, the company said. Hertz’s new owners seek to overhaul the century-old company, implementing new software to improve inventory management and better forecast customer demand.
Hertz warned that efforts to electrify its fleet could be hampered by factors outside its control, such as the shortage of semiconductor chips and other constraints.
The company said it has partnered with Super Bowl champion Tom Brady for a marketing campaign for the electric-vehicle rentals.
Bloomberg News reported on Hertz’s order earlier Monday.
Within the past year, Hertz’s business has bounced back as travel restrictions were lifted and more Americans got Covid-19 vaccines. At the same time, Hertz and other rental-car companies have struggled to keep up with the surge in bookings, lacking vehicles to provide customers as the broader car business confronts a shortage of new vehicles. The shortfall has pushed up rental-car prices and left renters with fewer options.
Tesla is building a network of charging stations for its vehicles to augment those that some owners are having installed at their homes to get power into their vehicles. Tesla users, at times, have complained about long wait periods at charging facilities.
“While we certainly have work to do in expanding capacity in some congested areas, average congestion on the network has decreased over the past 18 months,” Tesla’s head of engineering, Andrew Baglino, said on an earnings call this month. The Tesla charging network, he said, has doubled over the past 18 months and the company plans for it to triple over the next two years.
Tesla says on its website that it has more than 25,000 charging stations world-wide, principally in North America and Europe.
Tesla Chief Financial Officer
said on the earnings call that the first customer deliveries from the two new factories—one near Austin, Texas, and another in Germany—aren’t necessarily expected this year and that the pace at which production scales up is still somewhat uncertain.
While the Hertz deal should allow more people to drive Teslas, it comes as scrutiny of Tesla’s advanced driver-assistance features has intensified. On Monday, the head of the National Transportation Safety Board doubled down on earlier criticism, chastising Tesla for not addressing what the agency views as safety deficiencies in the company’s driver-assistance technology.
“[O]ur crash investigations involving your company’s vehicles have clearly shown that the potential for misuse requires a system design change to ensure safety,” NTSB Chair Jennifer Homendy said in a letter to Tesla Chief Executive
The NTSB investigates crashes and makes safety recommendations but doesn’t have regulatory authority. The agency has urged Tesla to take additional steps to limit how drivers are able to use the company’s advanced driver-assistance technology, which doesn’t make vehicles autonomous.
Tesla didn’t immediately respond to a request for comment about the letter.
—Rebecca Elliott contributed to this article.
Write to Dave Sebastian at email@example.com
Corrections & Amplifications
Tesla last week posted its third consecutive quarter of record profit. An earlier version of this article incorrectly said Tesla last week posted its third consecutive quarter of record sales. (Corrected on Oct. 25)
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