Tesla scores record order as Hertz rental cars go electric

Elon Musk's Tesla Inc on Monday received its biggest-ever order, as Hertz announced it would buy 100,000 electric rental cars to go more eco-friendly just months after emerging from bankruptcy. Tesla stock was up 4.3% in premarket trading and was set to open at a record high following the order. Shares were also buoyed by news of the company's Model 3 becoming the first electric vehicle to top monthly sales of new cars in Europe.

The order from Hertz comes as Tesla is coping with a backlog of unfulfilled orders for its vehicles and continuing supply chain disruptions, but it does solidify the mainstream appeal of electric cars. "Our backlogs are continuing to grow and average customer wait times are extending," Chief Financial Officer Zach Kirkhorn told investors last week.

The world's most valuable automaker delivered a record https://www.reuters.com/business/autos-transportation/tesla-delivers-241300-vehicles-q3-beats-analysts-estimates-2021-10-02 241,300 electric cars globally in the third quarter, even as it warned that supply chain headwinds https://www.reuters.com/business/autos-transportation/tesla-beats-quarterly-revenue-estimates-2021-10-20 would pressure margins. Tesla's cheapest Model 3 sedan starts at about $44,000, making this order worth about $4.4 billion, if the entire order were for its mass-market sedan.

With the current order, scheduled for delivery by the end of 2022, Hertz said EVs will make up more than 20% of its global fleet. "It (the order) puts an exclamation point under guidance for 50%+ growth in deliveries," Roth Capital analyst Craig Irwin said. "Another solid piece of evidence EVs are going mainstream."

The car rental firm also said it was installing thousands of chargers throughout its network. Customers who rent a Tesla Model 3 will have access to 3,000 Tesla supercharging stations throughout the United States and Europe. "Electric vehicles are now mainstream, and we've only just begun to see rising global demand and interest," said Hertz interim Chief Executive Officer Mark Fields.

U.S. President Joe Biden has made it a priority to support the rollout of electric vehicles to combat climate change, but a lack of charging network infrastructure could remain a key hurdle to his ambitious plan. Analysts at Morgan Stanley bumped their price target on Tesla by 33% as the brokerage expects the electric carmaker to keep posting higher volumes, reaching more than 8 million deliveries in 2030.

A Cox Automotive study said Americans are hesitant to buy EVs due to anxieties about the ranges of the vehicles and high price tags, as well as weak charging infrastructure. Bloomberg News was first to report about the order.

Hertz had filed for bankruptcy protection last year as travel demand sank during the height of the pandemic and talks with creditors failed to provide relief. It was rescued by a group of investors including Knighthead Capital Management, Certares Opportunities and Apollo Capital Management.

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