Hertz Global Holdings Inc has made a huge order for 100,000 Teslas, marking a significant first step toward electrifying its rental fleet and mainstreaming electric cars.
Bloomberg broke the news a few minutes before the press release, saying anonymous sources who indicated the deal is worth $4.2 billion to Tesla. It will be the single-largest purchase of electric cars ever made. (Editor's note: In 2019, Amazon placed an order for 100,000 delivery vehicles with Rivian.) The cars will be delivered over the following 14 months from a Tesla vehicle supply that is currently in short supply.
Hertz is paying list pricing for the Teslas, according to Bloomberg, and hence is not receiving a discount for its large purchase, which car rental businesses often receive from automakers.
According to the source, Tesla Model 3s will be available for rent at Hertz outlets in major US markets and parts of Europe starting in early November. Customers will have access to Superchargers, and Hertz will be developing its own charging infrastructure.
Bloomberg reports:
The electrification plan is Hertz's first strong effort since emerging from bankruptcy in June, and it will eventually cover almost all of the company's half-million cars and trucks worldwide. It also shows that Hertz's new owners, Knighthead Capital Management and Certares Management, are serious about shaking up an industry dominated by a few huge firms that are known for being slow to change.
Teslas have been extremely popular on Turo, a peer-to-peer car-sharing service established in San Francisco, with some people making a living with a small Tesla fleet.
TSLA stock is up 4-5 % in premarket trading as a result of the news and a Morgan Stanley upgrade.
As a result of the pandemic travel slump, Hertz declared for bankruptcy in May 2020. The demand for rental cars then increased, due in large part to a car shortage caused by increased demand for used cars and supply chain delays, as well as a recovery in travel.
Hertz officially emerged from bankruptcy on June 30, helping it to shed more than $5 billion in debt in a speedy turnaround due to increased demand for rental cars.
The press release has been updated to incorporate a new "Let's Go" campaign with NFL quarterback Tom Brady:
Hertz is also teaming up with Tom Brady, a seven-time Super Bowl champion and entrepreneur, to show how it is making electric car rentals fast, simple, and more accessible, as the firm continues to push forward with its goal to lead the future of mobility and travel.
"Electric vehicles have become mainstream, and we've only just begun to observe increased global demand and interest," said Mark Fields, Hertz's interim CEO. "As a mobility company, the new Hertz will lead the way, starting with North America's largest EV rental fleet and a commitment to increase our EV fleet and provide the finest rental and recharging experience for leisure and business customers across the world," says the company.
According to Pew Research Center, 40% of US buyers are likely to consider an electric vehicle the next time they are in the market for a new vehicle. Major EV sales increased by 200 percent last year, and this trend is expected to continue as global manufacturers pledge to increasing EV sales. Three US automakers, for example, agreed in August to increase EV sales to 40-50 percent by 2030.
Electric vehicles' high efficiency, great user experience, and climate change advantages are driving expansion, which is supported by battery advances and quickly increasing charging networks. Electric vehicle drivers also save money on maintenance and fuel.
Customers will be able to rent a Tesla Model 3 at Hertz airport and local sites in major US markets and certain European cities beginning in early November and continuing through the end of the year.
Hertz is also installing thousands of chargers across its network of locations. Customers rental a Tesla Model 3 will have access to 3,000 Tesla supercharging stations located across the United States and Europe.
For Tesla EVs, Hertz will provide a premium and unique rental experience. This includes digital advice to educate clients about electric vehicles so they can go on their way faster, as well as an EV rental booking process that will be available soon through the Hertz mobile app.
With the current purchase, electric vehicles will account for more than 20% of Hertz's global fleet, with Level 2 and DC fast charging scheduled to be available in about 65 locations by the end of 2022 and more than 100 markets by the end of 2023. These objectives, according to Hertz, could be hampered by variables outside his control, such as semiconductor chip shortages or other limits.
This is a big win for Teslas and electric vehicles in general. Adoption will be improved if bottoms are placed in seats. It's interesting to see Mark Fields, the interim CEO of Hertz, driving the charge here, because Fields was removed from Ford a few years ago for failing to update the company and prepare properly for the onslaught of electric vehicles.
It's also a big win for Hertz, because we, and I imagine most Tesla owners, will hire cars from them first. I'm going to assume they don't expect the cars to be returned charged, and I'm hoping they don't charge some crazy "recharging fee" similar to the $9.99 they charge for gas if the car isn't returned full.
Back in 2016, we expected that renting Teslas would be a big industry for the company.
Tom Brady, like it or not, is an EV lover who has been driving one for years. Many people in middle America who haven't yet been infected by the EV bug will hear about him thanks to his celebrity. This is a key moment in rising popularity.
Another important factor to consider is how this may effect Model 3 supply. Tesla is already unable to meet demand and is now producing 1 million cars per year. However, assuming Austin and Berlin go live shortly, the manufacturer should be able to handle the additional demand in the coming year and a half.
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