Just four months out of bankruptcy and Hertz Global Holdings Inc. has placed an order for 100,000 Teslas in order to electrify its rental car fleet.
Cars will be delivered to the company within the next 14 months, but as early as next month, Tesla Inc.’s Model 3 sedan will be available to rent at Hertz outlets in major U.S. markets and in some parts of Europe.
In a statement that was released, the company said that customers will be able to use Tesla’s supercharger network, as well as Hertz’s own charging infrastructure.
According to anonymous sources, it’s the single-largest purchase ever for electric vehicles, or EVs, and represents nearly $4.2 billion in income for Tesla. Unlike other car rental businesses, which generally demand steep discounts from automakers, Hertz appears to be paying close to list pricing due to the size of the order.
“How do we democratize access to electric vehicles? That’s a very important part of our strategy,” said Mark Fields, Hertz’s new chief executive officer. “Tesla is the only manufacturer that can produce EVs at scale.”
The electrified plan is Hertz’s first major push since emerging from bankruptcy in June, and it will eventually cover almost all of the company’s half-million cars and trucks worldwide. It also shows that Hertz’s new owners, Knighthead Capital Management and Certares Management, are serious about shaking up an industry dominated by a few huge firms that are notorious for being reluctant to change.
In premarket trading in New York, Tesla shares jumped as much as 4.8 %, pushing the automaker closer to a $1 trillion valuation. Hertz, which is now trading over the counter ahead of its relisting on the Nasdaq Stock Market, had little early activity.
Hertz may be able to prevent competitors from copying the tactic by securing such a large portion of Tesla’s production — the order is comparable to around 1/10th of what the automaker can now produce in a year. Hertz is also defying trends by paying full price for well-equipped automobiles rather than the standard base-model, significantly discounted sedans found on rental lots.
Hertz’s largest car and truck supplier in 2020 was General Motors Co., followed by Nissan Motor Co. and Ford Motor Co.
Teslas will appeal to rental consumers who desire a green choice or who want to check out a battery-powered vehicle due to their zero exhaust emissions. Tom Brady, the seven-time Super Bowl champion quarterback, has been approached by Hertz to star in commercials promoting the new Teslas. It also launched an EV website that offers free charging till the end of January.
Ford is turning to EVs as part of a commitment to renewable energy under Fields, who was CEO of Ford for over three years until May 2017. Teslas are also less expensive to maintain and refill than cars with internal combustion engines, and their resale value is often higher.
Along with the Tesla launch, Hertz is undergoing a broader transformation of its business centered on mobility and digitization. Expedited rental bookings on the Hertz app will be one part of that.