{"id":12798,"date":"2021-11-02T06:13:41","date_gmt":"2021-11-02T10:13:41","guid":{"rendered":"https:\/\/autosector.com\/auto\/?p=12798"},"modified":"2021-11-02T06:13:41","modified_gmt":"2021-11-02T10:13:41","slug":"elon-musk-puts-stop-tesla-tsla-rally-hertz-deal-not-signed","status":"publish","type":"post","link":"http:\/\/autosector.com\/?p=12798","title":{"rendered":"Elon Musk puts a stop to Tesla’s (TSLA) rally, says Hertz deal is not signed and not a big deal"},"content":{"rendered":"

Elon Musk has put a stop to Tesla\u2019s (TSLA) historic rally by saying that the Hertz deal is \u201cnot signed\u201d and adding that he doesn\u2019t believe it has any effect on Tesla\u2019s economics.<\/p>\n

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Tesla\u2019s stock (TSLA) rallied more than 55% over the last month alone.<\/p>\n

The bulk of the increase came after Hertz\u2019s announcement that they ordered 100,000 Tesla vehicles<\/a>, then partnered with Uber to provide 50,000 of them to their drivers with an option for 100,000 more.<\/p>\n

It sent Tesla\u2019s stock surge significantly.<\/p>\n

It culminated in an 8% increase yesterday alone that saw Tesla\u2019s valuation surging to $1.2 trillion.<\/p>\n

However, this morning, Tesla\u2019s rally has officially stopped with the stock being down 5% in pre-market trading.<\/p>\n

The significant decline comes after a tweet from Elon Musk in the middle of the night.<\/p>\n

A Twitter user thanked Musk for the stock price increase, and while the CEO responded by seemingly accepting credit at first with a \u201cyou\u2019re welcome,\u201d he quickly poured cold water on the rally by saying that the Hertz deal shouldn\u2019t have this kind of impact:<\/p>\n

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You\u2019re welcome!<\/p>\n

If any of this is based on Hertz, I\u2019d like to emphasize that no contract has been signed yet.<\/p>\n

Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers.<\/p>\n

Hertz deal has zero effect on our economics.<\/p>\n

\u2014 Elon Musk (@elonmusk) November 2, 2021<\/a><\/p>\n<\/blockquote>\n<\/div>\n<\/figure>\n

The CEO said that \u201cno contract has been signed\u201d on the Hertz deal and it shouldn\u2019t have a strong effect on Tesla\u2019s economics since the company is production constrained:<\/p>\n

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\u201cIf any of this is based on Hertz, I\u2019d like to emphasize that no contract has been signed yet. Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers. Hertz deal has zero effect on our economics.\u201d<\/p>\n<\/blockquote>\n

When the rally first started, Musk had already pointed out that it wouldn\u2019t accelerate Tesla\u2019s overall deliveries as the company is constrained by production, not demand. <\/p>\n

Electrek<\/em>\u2018s take<\/h2>\n

The first part of Musk\u2019s comment is a bit concerning since Hertz made it clear that they \u201cplaced\u201d an order with Tesla for 100,000 Model 3 vehicles.<\/p>\n

They have already taken deliveries of some of them.<\/p>\n

Since Hertz didn\u2019t receive any specific discount for their order, it\u2019s possible that they went through the regular ordering process and simply put a $100 deposit per car to claim that they \u201cplaced\u201d the order, which might not constitute a \u201csigned\u201d deal.<\/p>\n

As for the second part, it is technically true, but as we discussed on the Electrek<\/em> podcast last week<\/a>, I think the Hertz deal has several benefits for Tesla and the broader EV adoption beyond simply adding 100,000 vehicles to Tesla\u2019s backlog.<\/p>\n

Long term, once those vehicles are in operation both in Hertz and Uber\u2019s fleets, it will help get more people to try electric cars and accelerate the market shift toward electric vehicles.<\/p>\n

It\u2019s also going to encourage other large fleet managers to think bigger when it comes to electrifying their fleets.<\/p>\n

It\u2019s just another signal that if you are thinking about buying a new car, like Hertz, you should think about buying an electric car. <\/p>\n

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