Life Auto Hertz goes electric, ordering $5.4bn in Teslas

Hertz goes electric, ordering $5.4bn in Teslas

hertz tesla
Car rental company Hertz has ordered 100,000 Teslas, in a move seen as a major pivot towards electric vehicles. Photo: Getty
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Hertz has ordered 100,000 electric vehicles from Tesla, one of the largest purchases of battery-powered cars in history and the latest evidence of the US’s increasing commitment to EV technology.

The purchase by one of the world’s leading rental car companies reflects its confidence that electric vehicles are gaining acceptance with environmentally minded consumers as an alternative to vehicles powered by petroleum-burning internal combustion engines.

Tesla shares surged as much as 14.9 per cent to $US1045.02 ($A1394.18) on Monday, after the announcement, with its value surging to $US1 trillion. Reuters said that made it the world’s most valuable car maker.

Even chief executive Elon Musk expressed surprise at the surge.

“Strange that moved valuation, as Tesla is very much a production ramp problem, not a demand problem,” Mr Musk tweeted in reply to a comment by Ross Gerber, co-founder of the investment fund Gerber Kawasaki and a Tesla shareholder.

“Wild $T1mes!” Mr Musk wrote in a separate tweet.

Tesla is the first to join the elite club of trillion-dollar companies that includes Apple Inc, Inc, Microsoft Corp and Alphabet Inc.

Elsewhere, Hertz’s interim CEO Mark Fields to The Associated Press that said Teslas were already arriving at the company’s sites and should be available for rental from November.

Hertz said in its announcement that it would complete its purchases of the Tesla Model 3 small cars by the end of 2022. It will also establish its own electric vehicle-charging network as it strives to build the largest rental fleet of electric vehicles in North America.

Mr Fields wouldn’t say how much Hertz is spending on the cars. But he said Hertz had sufficient capital and a healthy balance sheet after having emerged from bankruptcy protection in June.

The deal likely is worth about $US4 billion ($A5.4 billion) because each Model 3 has a base price of about $40,000. It also ranks at the top of the list of electric vehicle orders by a single company.

In 2019, Amazon ordered 100,000 electric delivery vans from Rivian, a startup manufacturer of electric vans, utes and four-wheel-drives. Amazon is an investor in Rivian.

The Hertz order helped send the price of Tesla shares jumping to an intraday record of $US997.57, before pulling back slightly by Monday afternoon.

In his interview with the AP, Mr Fields made clear his belief that electric vehicles were increasingly moving into the mainstream and that Hertz intended to be a leading provider of EVs to rental customers. He pointed to surveys showing that in the past five years, consumer interest in electric vehicles has grown dramatically.

Hertz will also invest in its own charging network.

Customers would also be able to use Tesla’s own large charging network for a fee, Mr Fields said. The company has a network of about 25,000 chargers worldwide.

He declined to say how much Hertz will charge to rent the Teslas or whether they would be more expensive for customers than gas-powered vehicles.

Daniel Ives, a technology analyst at Wedbush Securities, wrote in a note Monday (US time) to investors that Hertz’s order represented a “major feather in the cap” for Tesla and showed that a broad adoption of electric vehicles was under way “as part of this oncoming green tidal wave hitting the US”.

China and Europe have been ahead of the US on vehicle electrification. But demand in the United States is accelerating.

-with AAP