Tesla Market Cap Tops $1 Trillion After Hertz Model 3 Order

Believe it or not, Hertz paid full price on each of the 100,000 Model 3s it ordered, Elon Musk confirmed.

Tesla Model 3 in Hertz EV fleet

Dan Mihalascu

By: Dan Mihalascu

Oct 26, 2021 at 4:25am ET

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Yesterday’s announcement that Hertz ordered 100,000 Tesla Model 3 electric sedans has sent the automaker’s stock through the roof, with gains of 12.66 percent at the end of the trading day on October 25.

Since the stock price passed $1,000 per share ($1,024.86), Tesla has officially exceeded a $1 trillion valuation ($1.027 trillion or $1,027 billion), the highest of any automaker. Actually, there are only six companies worldwide that are worth $1 trillion or more: Saudi Aramco, Apple, Microsoft, Alphabet (Google’s parent company), Amazon, and Tesla.

The deal with Hertz is seen by analysts as an indication that more rental agencies will eventually switch to electric cars as part of an ongoing transition to electrification, putting Tesla in a favorable position for the future.

The car rental agency agreed to purchase 100,000 Tesla Model 3 EVs for its fleet of rental cars in a deal worth $4.3 billion—the biggest-ever rental car order for electric vehicles. The company said it will make Model 3 vehicles available to customers as soon as November.

Gallery: Hertz EV Fleet

Tesla Model 3 in Hertz EV fleet

Interestingly, Tesla CEO took to Twitter to express his surprise that the Hertz announcement led to such a strong rise in the carmaker’s share price.

“Strange that moved valuation, as Tesla is very much a production ramp problem, not a demand problem.”

Given how Tesla sales have exploded worldwide recently—the Model 3 was Europe’s best-selling car overall in September—the executive does have a point. However, with the Giga Berlin and Giga Texas plants nearing the start of production, Tesla will massively expand its production capacity.

What’s even interesting and quite unexpected about the Hertz deal is that the car rental agency paid full price on each Model 3 it ordered, Elon Musk confirmed in another tweet.

What do you think?

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“To be clear, cars sold to Hertz have no discount. Same price as to consumers.”

The moral of the story? If ordering 100,000 cars won’t land you a discount, nothing will—at least not if you want those vehicles to be Teslas. These are wild times, indeed.