Tesla joins trillion-dollar club after groundbreaking Hertz deal
Tesla’s stockmarket value has cleared $US1 trillion for the first time after it received the biggest ever order for electric cars from Hertz.
Tesla’s stock market value has cleared $US1 trillion for the first time after it received the biggest ever order for electric cars from Hertz.
Hertz, the American car rental business, said it would buy 100,000 electric cars from Tesla in a deal worth more than $US4bn ($5.33bn).
The deal pushed Tesla shares higher, leaving it with a market value $US1.03 trillion and making Elon Musk’s company the first carmaker to clear the $US1 trillion mark. Other companies to have hit the milestone include Apple, Amazon, Alphabet, the owner of Google, Microsoft and Facebook, the social networking site which Tesla has surpassed as the fifth largest US company by market valuation.
Shares in Tesla have risen more than 40 per cent this year and its value has increased fivefold since it overtook Toyota as the world’s most valuable carmaker in July last year.
Its shares were also pushed up by news of its Model 3 sedan becoming the first electric car to top monthly sales of new cars in Europe, amid a dip in the sale of conventional vehicles linked to global supply chain disruption.
Mr Musk’s 23 per cent stake in Tesla is now worth about $US230bn, according to Refinitiv. The carmaker’s latest earnings, released last week, were also enough to release a fresh $US8bn tranche of discounted share options for the tycoon.
Tesla cars will be available to rent at Hertz in the US and in parts of Europe from early November, Hertz said, with the rental company adding that it would build its own charging infrastructure to complement that of the world’s most valuable carmaker.
The Hertz deal underlines the growing mainstream appetite for electric vehicles, although Tesla is battling a backlog of unfulfilled orders as demand outstrips supply. Like most car companies, Tesla is experiencing supply chain problems but Daniel Ives and John Katsingris, analysts at Wedbush, noted that capacity constraints would be eased by the opening of new factories in Austin and Berlin in the coming months, which they said should expand Tesla’s capacity to roughly two million cars annually over the next 18 months.
Tesla delivered a record 241,300 electric cars in the third quarter – a fraction of the level produced by rival automotive giants – but warned supply chain issues would place pressure on profit margins.
The analysts said: “Tesla getting an order of this magnitude highlights the broader electric vehicle adoption under way as part of this oncoming green tidal wave now hitting the US. This Hertz deal is a major feather in the cap for Tesla and speaks to where demand is heading in the electric vehicle transformation hitting the auto sector globally.”
Mark Fields, interim Hertz chief executive, said the deal, expected to be completed by the end of 2022, would be “the competitive advantage for us”.
The Tesla order will mean one in five of Hertz’s global fleet will soon be electric. Tesla’s cheapest Model 3 starts at $US44,000, meaning the Hertz deal is worth about $US4.4bn if this was the only vehicle ordered, although the rental company would not say how much it was paying.
The Times
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