Hertz (NYSE: HTZZ) announced that it would be ordering 100,000 Tesla (Nasdaq: TSLA) vehicles. In an interview with CNBC, CEO Mark Fields said that the deal could eventually reach 200,000 Teslas. Teslas are expected to be available to rent by November at Hertz locations in most parts of the country.
Hertz is looking to grow its rental fleet after selling big chunks of it due to the company being in bankruptcy and expectations that the pandemic would hurt demand. In fact, this happened across the entire rental car industry which resulted in soaring car rental prices as demand actually sharply increased due to people preferring to take short trips rather than fly on airplanes.
The move seems to be part of Hertz's plan to electrify its entire fleet of cars and trucks. It also announced that it had signed Tom Brady as its public spokesman for Hertz's EV rentals.
Tesla's Stock Price
The news sent Tesla's stock soaring to new, all-time highs and also caused a modest bump in Hertz's stock price. Tesla's stock price has been on a massive run since its correction from mid-January to mid-May when it pulled back nearly 40%. Since then, Tesla is up by more than 100% and has been making, new all-time highs.
It is quite interesting that the deal accounts for $4.2 billion in revenue but sent the stock's market cap soaring by more than $50 billion. Based on the overall price, it doesn't seem that Hertz is getting a substantial discount on the purchase like it typically does with OEMs.
Uber Deal
Hertz has also partnered with Uber (Nasdaq: UBER) and will make 50,000 of the Teslas available to Uber drivers. However, Hertz said the deal with Uber includes the option to rent as many as 150,000 Teslas. These rentals would be available to Uber drivers for an average price of $300 per week.
In theory, it's a good deal for drivers as they save on time in terms of fueling and don't incur the typical $0.40 to $0.50 per mile in fuel and wear & tear. Additionally, it could bring more drivers to Uber's platform.