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Thursday, August 11, 2022

Tesla’s market capitalization has surpassed $1 trillion with the purchase of 100,000 vehicles by Hertz

In a statement released on Monday, Hertz said that it will convert more than 20% of its rental fleet to Tesla electric vehicles by the end of next year, a news that helped push Tesla’s stock value beyond $1 trillion for the first time.

Purchasing 100,000 Teslas was a risky decision for Hertz, which is just recently out of bankruptcy, and a symbol of the rising momentum behind the transition to all-electric cars in general.

And it was the latest source of gasoline for Tesla’s soaring stock price, which rose about 13 percent on the day to end at $1,024.86, marking the company’s first closing above $1,000.

The “Wild $T1mes” are out in force! Elon Musk, the CEO of Tesla, gushed about the achievement on Twitter.

Hertz refused to provide an estimate of the value of the order when it said it had placed one with Tesla on Monday morning. According to Bloomberg, the purchase will produce around $4.2 billion in income for Tesla, indicating that Hertz is paying close to the vehicle’s face value for the cars. The majority of car rental firms need substantial discounts for big vehicle purchases. “To be clear, automobiles sold to Hertz get no discount,” Mr. Musk said on Twitter on Monday evening. “The pricing is the same as it is for customers.”

In select key areas in the United States and Europe, beginning in early November, Hertz customers will be able to hire a Tesla Model 3 small vehicle. A spokesperson for the firm said that it intended to install thousands of chargers at its sites and that it was collaborating with Patriots quarterback Tom Brady to promote its electric vehicle services in a marketing campaign.

As per a news release, “Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest.” Mark Fields, Hertz’s interim chief executive, who previously served as president and CEO of Ford Motor, said in the release that “electric vehicles are now mainstream.”

According to Michelle Krebs, an analyst with Cox Automotive, the transaction might be beneficial to both parties.

This is “special,” she added, adding that it “truly allows Hertz to separate itself from other rental vehicle businesses.” “It’s a fantastic agreement for Tesla since it exposes Tesla’s electric vehicles to a far broader range of buyers.”

Tesla’s trillion-dollar value is the latest indication of just how profoundly the company has revolutionised the car industry, despite the fact that it has struggled to generate money for over 20 years. Its market capitalization exceeds the combined market capitalizations of General Motors, Toyota, Ford, Volkswagen, BMW, Honda, and numerous other automobile manufacturers.

Not long ago, Tesla’s Fremont, California, factory was experiencing production issues that CEO Elon Musk referred to as “manufacturing hell.” And as recently as March of last year, when the coronavirus epidemic reached the United States, the company’s stock price was just over $70 per share, according to Bloomberg.

A substantial order from Hertz may be able to assist Tesla in balancing production and managing a change in demand for its lower-priced cars. Sales of the Model 3 have been declining in recent quarters, with sales of the Model Y hatchback outpacing those of the Model 3 sedan.

In the next months, the business aims to begin production of the Model Y at factories now under construction in Austin, Texas, and near Berlin, Germany, respectively. The expansion of those operations may result in fewer output at the company’s Fremont unit.

David Faber
I am a Business Journalist of The National Era
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