The purchase also represents, by far, the biggest transition to electric vehicles by a car rental company.
âElectric vehicles are mainstream now and we’re just starting to see an increase in demand and interest globally,â said Mark Fields, interim CEO of Hertz and former CEO of Ford. âThe new Hertz will lead the way as a mobility company, starting with the largest rental fleet of electric vehicles in North America and a commitment to grow our fleet of electric vehicles. “
But the reasoning goes beyond customer demand: Hertz and its rivals struggle to source gasoline-powered cars from mainstream automakers as a shortage of computer chips and other parts makes auto production difficult.
It also shows that Hertz, less than four months from bankruptcy, is ready to spend big again.
The company emerged from bankruptcy on June 30 with $ 1.8 billion in unallocated cash and $ 1.2 billion available on lines of credit. He will likely finance the purchase of the Tesla, as he does with most of his car purchases. Hertz also recently announced plans for an initial public offering that will help raise funds.
Hertz also announced that Tampa Bay Buccaneers quarterback Tom Brady will be the spokesperson for his ad campaign, another sign the company is spending heavily on this electric vehicle push.
What this means for Tesla
The purchase of Hertz is also a milestone for Tesla, which has so far done little in fleet sales.
This willingness to move into fleet sales will help Tesla keep its upcoming factories in Austin, Texas and Berlin, Germany occupied – and could also potentially help the company meet its ambitious goal of a 50% annual increase in sales. sales for the foreseeable future.
Additionally, having Tesla in the Hertz fleet could introduce electric vehicles to millions of drivers for the first time, which could also lead to increased demand.
Tesla, which rarely responds to media inquiries, did not respond to a request for comment on the order.
Hertz has not disclosed the financial terms of the deal, but the Model 3s it purchases have a starting price of $ 44,000 for US retail customers. Car rental companies typically pay less than the full retail price of cars, but Tesla currently has more demand for its vehicles than it has the capacity to build them, and therefore little incentive to offer discounts. important. The total order could therefore exceed $ 4 billion.
It was a whole different story about a year and a half ago, when Hertz filed for bankruptcy in May 2020 – relatively early in the pandemic as the crisis rocked the industry. With air travel almost at a standstill, Hertz and its competitors sold some vehicles to raise funds to survive. But once the demand for travel returned, they were in a crisis: the shortage of chips meant that few cars were available to replenish their fleets.
Hertz, which emerged from bankruptcy in July 2021, is hoping that a new offering from Teslas can kill two birds with one stone: replace its inventory while giving customers access to clean-energy cars that don’t have to. no need to be fueled with expensive gasoline.
Across the industry, the combination of high demand and limited availability has pushed rental car prices to record highs, well above previous peaks. Even after falling from the record car rental prices set in June, according to the U.S. Consumer Price Index, they were still 51% higher in September this year than in September 2019.
Tesla shares rose 5% early in the session, bringing the company to a market value of $ 956 billion. This positions Tesla to pass Facebook as the fifth most valuable US company, behind Apple, Microsoft, Google and Amazon.
Tesla’s market value is now greater than the combined value of the world’s 11 largest automakers.
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