Tesla shares fall after Musk dismisses Hertz deal on Twitter

Elon Musk has cast doubt over Hertz’s order of 100,000 Tesla models after he tweeted that the deal has not been signed yet.

Last week, Hertz revealed that it had placed an initial order with Tesla for 100,000 electric vehicle models, as the vehicle rental firm looked to accelerate the electrification of its fleet.

The company also revealed that it had partnered with Uber to make up to 50,000 Teslas available by 2023 for drivers to rent when using the Uber network.

However, earlier this week, Tesla boss Elon Musk tweeted that a deal with Hertz had not actually been signed yet, and that it will only sell models to Hertz at the same margin as regular paying customers.

Musk said: “If any of this is based on Hertz, I’d 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.”

Hertz did not reply to the tweet directly but said it’s already receiving Tesla’s under its $4.2 billion plan to add 100,000 vehicles by 2022.

Despite Musk initially responding to a fan account that had thanked him for a rise in Tesla stock, the manufacturer’s shares dropped by 3% after the tweet was published.

Philip Nothard, insight & strategy director of automotive services company Cox Automotive, told EV Powered that despite the order accounting for around a tenth of Tesla’s global car production, the manufacturer would not struggle to cope with the demand, should the contract eventually be signed.

He said: “Tesla is unlikely to suffer fulfilling an order of this volume. The brand has successfully weathered the storms of reliability concerns, the impact of Covid-19, and the semiconductor and raw materials shortages crisis, far better than other manufacturers, including those still mainly involved in internal combustion engine (ICE) vehicle production. This is down to the fact that Tesla’s CEO, Elon Musk is heavily involved with consumerism rather than solely automotive manufacturing.

“This would have enabled him to see what was on the horizon and means he hasn’t needed to rely on Tier 1 and Tier 2 suppliers for semiconductors, unlike manufacturers of ICE vehicles. He has built his own automotive supply chain ahead of time, while several traditional OEMs are now clamoring to keep up in the EV race.”