Shares in Tesla and car rental company Hertz whipsawed on Tuesday after the electric vehicle maker’s chief executive, Elon Musk, raised doubts about a big order that drove a stock price rally and sent its market value past $1tn.
The electric carmaker’s market value passed $1tn last week for the first time thanks in part to news that Hertz had ordered 100,000 Tesla Model 3 sedans to electrify its fleet.
On Monday evening, however, Musk told a Tesla fan account that “no contract has been signed yet” and the deal “has zero effect on our economics” because Tesla “has far more demand than production”.
Hertz, which was bought out of bankruptcy by private equity companies Knighthead Capital and Certares earlier this year, said on Tuesday: “As we announced last week, Hertz has made an initial order of 100,000 Tesla electric vehicles and is investing in new EV charging infrastructure across the company’s global operations.
“Deliveries of the Teslas already have started. We are seeing very strong early demand for Teslas in our rental fleet, which reflects market demand for Tesla vehicles.”
Shares in Tesla fell as much as 7 per cent from Monday’s record close in pre-market trading on Tuesday and were down 4 per cent shortly after markets opened. They quickly pulled back some of the losses to trade down 1.8 per cent. The stock is still up more than a quarter since the Hertz deal was announced last Monday.
Shares in Hertz, which trade over-the-counter as it prepares to relist on the Nasdaq, dropped as much as 10 per cent before swinging up to a 7 per cent gain.
You’re welcome!
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.
— Elon Musk (@elonmusk) November 2, 2021
Tesla did not immediately respond to a request for comment.
Musk has developed a reputation for making market-moving statements online. He knocked 10 per cent off Tesla’s stock last year by tweeting that the “price is too high”, and he was sued by the Securities and Exchange Commission after claiming that there was “funding secured” for a buyout of Tesla in 2018.
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