Shares of Tesla surged past the $1 trillion mark on Monday — making it the first auto maker to surpass the stratospheric threshold — after Hertz announced a deal to buy 100,000 of Elon Musk’s electric cars in an overhaul of its rental fleet.
Under the mega-deal — the biggest-ever rental-car order for electric vehicles — the companies said Hertz will shell out $4.2 billion for the 100,000 Model 3s.
That works out to about $42,000 per car, which is close to the current list price and about 25 percent more than what Hertz has typically paid in its wholesale deals.
The deal, which was described as an “initial order,” is slated to be fulfilled over the next 14 months, and Tesla is meanwhile free to cut similar deals with other car-rental giants as a global shortage of automobiles persists.
Shares of both companies surged Monday on the news, with shares of Tesla — headed by tech billionaire Elon Musk — up 9 percent, at $991.95, hitting an all-time high and giving the company a market cap of more than $1 trillion. Hertz shares up 7 percent, at $26.43.
Meanwhile, one Hertz shareholder said he doesn’t believe the company will rent out its Teslas for cheap, speculating that it’s eyeing a rate averaging $120 a day — similar to what it currently charges for a BMW. And with a rental-car shortage continuing to rage industrywide, the rate might be closer to $200 a day in the near term, according to a source.
Jefferies analyst Hamzah Mazari, who closely covers the car rental space, told The Post he believes in a normal car rental environment Hertz might rent Tesla 3s for about $85 a day, a premium price but lower than the Hertz shareholder predicts.
In the most recent quarter, Hertz said it rented cars for an average of $64 a day — much higher than the $42 average two years ago before a worldwide microchip shortage sparked a global shortage of vehicles, according to a Hertz shareholder.
The rental-car giant — which emerged from bankruptcy just four months ago — said Monday that Tesla’s new mega-fleet of Model 3 sedans will start becoming available at select Hertz locations in major US markets and overseas early next month.
It’s the first big announcement for Hertz since it emerged from bankruptcy in June under new owners, Knighthead Capital Management and Certares Management.
“While Hertz is in the early stages of electrifying its rental car fleet, Tesla getting an order of this magnitude highlights the broader EV adoption underway in our opinion as part of this oncoming green tidal wave now hitting the US,” Dan Ives, managing director at Wedbush Securities, said in a note.
“This Hertz deal is a ‘major feather in the cap’ for Tesla and speaks to where demand is heading in the EV transformation hitting the auto sector globally.”
The company also unveiled a new marketing push featuring NFL legend Tom Brady.
“Hertz is changing the game when it comes to the future of mobility and has come through for me time and time again,” Brady said.
“I’ve been driving an EV for years and knowing Hertz is leading the way with their electric fleet speaks to how the world is changing and the way companies are approaching being environmentally and socially conscious.”
The Model 3s will amount to 20 percent of the company’s fleet. Hertz will build out a network of charging stations while also gaining access to Tesla’s as it launches a plan to go fully electric in the coming years.
Tesla’s get about 200 miles per charge, which should work well for Hertz, as a renter typically drives about 140 miles, according to a source.
Part of Tesla’s rationale is to enable curious customers to more easily try out a Tesla. Meanwhile, the deal will boost Hertz’s image as more upscale and environmentally friendly. Hertz plans to list all its shares around January as it reemerges from bankruptcy, with most stock currently still held by creditors, according to the shareholder.
Nevertheless, some insiders said the deal poses risks for both companies. Tesla runs the risk that Hertz could make it less of a premium brand. Toyota’s Corolla, for example, took a hit to its reputation after it started selling vehicles to rental car companies, the Hertz shareholder said.
“Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest,” said Hertz interim CEO Mark Fields in a Monday press release.
Wedbush estimated that demand for Teslas is outstripping supply by roughly 30,000 cars, with the chip shortage extending wait times for Model Ys and some Model 3s into the spring.
“However, big supply help is on its way for Musk & Co. as the long awaited Giga factory hubs in Austin and Berlin are set to have the red ribbon cut over the coming months and should expand Tesla’s capacity to roughly 2 million units annually over the next 18 months,” Ives wrote.
Musk recently assured that the Berlin factory will open in November.
Reps for Tesla and Hertz didn’t immediately respond to requests for comment.
