Elon Musk’s Electric Car manufacturing giant, Tesla, made headlines today by reaching a $1 trillion market cap. This follows yesterday’s jump in stock price for the company. Tesla owes the fast growth to auto rental company Hertz Global Holdings Inc., which is only four months out of bankruptcy, has placed an order for 100,000 Teslas as part of an ambitious strategy to electrify its rental vehicle fleet. Tesla Inc.’s stock rose, putting the company’s market capitalization beyond $1 trillion for the first time.
Tesla’s Model 3 sedans will be available to rent at Hertz outlets in key U.S. cities and parts of Europe from early November, according to a statement from the rental company. Customers will have access to Tesla’s supercharger network, as well as Hertz’s own charging infrastructure which is currently in development.
Elon Musk’s Tesla $1 Trillion Market Cap Breaks Electric Vehicle Sales Record
According to an informed and undisclosed source, this is the single-largest purchase ever for electric vehicles and represents nearly $4.2 billion in income for Tesla. Unlike automobile rental businesses, which generally seek steep discounts from automakers, Hertz appears to be paying close to list pricing due to the scale of the order.
Tesla’s stock soared as much as 9.8% intraday to a new high of $998.74, making it one of just six publicly listed U.S. firms – Alphabet, Microsoft, Apple, Amazon, Facebook, with valuations over $1 trillion. Hertz jumped as high as 14 percent to $28.25 on the over-the-counter market, ahead of its relisting on the Nasdaq Stock Market.
Hertz may be able to prevent competitors from copying this strategy by securing such a large portion of Tesla’s manufacturing, the order is around one-tenth of what the manufacturer can now produce in a year. Hertz is also defying convention by paying full price for well-equipped automobiles rather than the standard base-model, significantly discounted sedans found on rental lots.