towards an amicable finding?

Hertz’s order to Tesla

What news when we learned, at the end of October, that Tesla was dedicating 100,000 vehicles to Hertz! A massive order allowing the rental company to electrify its fleet and so, reduce its environmental footprint.

This is also a dynamic that we observe among other rental companies, anxious to meet the expectations of their customers.

Hertz did not communicate on the distribution of its order, but we already know that the Tesla Model 3 will be one of them. Indeed, the rental company has confirmed that the sedan will be available from November on its US catalog.

We can think that the sedan will represent the major part of the 100,000 cars ordered by Hertz. Arrived more recently, the Model Y should also be acclaimed. The Model S and Model X, whose restyled versions arrive at the end of 2022, will certainly be less numerous, given their much more premium positioning.

This order shows Hertz’s desire to bet on the electric car. In addition to the Superchargeur network, with which it is a partner across the Atlantic, the rental specialist plans to eventually build its own network.

Close to bankruptcy at the end of a difficult year, this recovery via the electric car could be beneficial for Hertz.

Elon Musk’s reaction on Twitter sows doubt

Elon Musk returned to the deal announced last week; he believes in substance that we should not expect too much from this deal in financial terms. In effect, the order exceeds the current production capacities of the American manufacturer.

In addition, he clarified that Hertz would not receive discounts for the purchase of electric vehicles. He also said he was surprised to see the stock soar. In fact, Tesla is not facing a lack of demand:

“If this is based on Hertz, I would like to point out that no contract has been signed yet. Tesla has far more demand than production. That’s why we will only sell cars to Hertz for the same margin that we charge our customers. The agreement with Hertz has no effect on our economic situation. »

After a jump to more than 1,200 billion dollars in the market capitalization of the group, this tweet somewhat cooled a very hot market…

This Tuesday (02/11), in the middle of the day, Tesla shares fell nearly 5% pre-listing, after jumping 8.50% on Monday. And that, after Elon Musk recalled that his company had not yet signed a contract with the rental company Hertz.

On his side, Hertz did not specify having signed a contract with Tesla. The sign was content to indicate in its press release that it had passed “an initial order of 100,000 Teslas by the end of 2022”. And she was careful not to mention a delivery schedule.

Many press articles had immediately relayed this information. An ad from the rental company, where American football star Tom Brady appeared surrounded by Teslas, also sparked a strong effervescence on Wall Street.

In addition, the US Highway Safety Agency (NHTSA) said Tuesday that Tesla had recalled nearly 12,000 vehicles in the United States. This, due to a communication software problem.

What do we think of it?

Have you ever seen two people argue, knowing that they are both right? It’s kind of sad, especially if you can’t convince them there’s no winner. And above all, that they have reason from their own point of view, and that it’s time to agree to disagree on the details.

This seems to have happened with the recent Tesla/Hertz deal. The latter probably ordered 100,000 cars from Tesla. We just have no idea how the rental company placed their order.

Elon Musk immediately clarified, on Twitter, that Hertz would not obtain a special price, nor an agreement. In addition, he should order cars at full price, like any customer. Apparently that wasn’t clear enough for some people, so Musk sounded the alarm again. He said there was no contract between Tesla and Hertz, at least not “yet.” »

It is true that between the huge demand, and the production constraints, Tesla would be crazy to sign a contract. Even to sell 100,000 Model 3 sedans to a rental company, when he can’t not even fill orders for individuals.

Status quo

That said, Hertz is right. 100,000 vehicles have been ordered (if its press release is to be believed). And Musk is right: no contract has been signed. Hertz does not get special treatmentModel 3 orders will not be pushed back an additional 100,000 cars.

Media say Tesla and Hertz disagree on timeline for order. Since there is no contract, Tesla does not have to meet a deadline for the delivery of the cars. Hertz assumes that cars are expected to arrive by the end of 2022. In fact, the lessor ordered as a regular customer. And the estimated delivery schedule is posted on Tesla’s website.

However, that’s an estimate for a reason, and it changes all the time. Ask anyone who’s ordered a Tesla in the past. Hertz also said Tesla has already started delivering the cars.

If Hertz has ordered, there’s no reason Tesla can’t start delivering.

The rental company told the Wall Street Journal:

“As we announced last week, Hertz has placed an initial order for 100,000 Tesla electric vehicles and is investing in new EV charging infrastructure across the company’s global operations. Tesla deliveries have already started. »

The post also said that sources familiar with the matter mentioned that Tesla and Hertz “ work out the details of an agreement“, linked to the delivery schedule.

So, is a real contract to come?

It’s hard to say right now, but it would be double good news. For Hertz, who wants to go electric. But also for Tesla, whose Model 3 continues to conquer hearts, and rightly so.

Source : Businessam


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