Hertz plans to have the largest EV rental fleet in North America.
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The latest milestone for Tesla , following the introduction of lower-priced sedan and crossover models and the opening of new overseas production capacity, is that weary business travelers will soon by able to rent its electric cars as they pass through airports.
Monday, Hertz (ticker: HTZZ) said it has ordered 100,000 Teslas to add to its fleet by the end of 2022. Neither company was immediately available to comment.
It is a significant order for Hertz given that the company has roughly 400,000 vehicles in its rental fleet, according to recent filings. “Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest,” said Hertz interim CEO Mark Fields in the company’s news release. “The new Hertz is going to lead the way as a mobility company, starting with the largest EV rental fleet in North America.”
Hertz is also installing thousands of EV chargers at its locations.
Tesla stock was up more than 4% in premarket trading, though the Hertz news doesn’t appear to have been behind the move. Futures on the S&P 500 and Dow Jones Industrial Average were both up slightly, while shares of Hertz were unchanged.
What is lifting Tesla stock is news that Morgan Stanley analyst Adam Jonas raised his Tesla price target to $1,200 a share from $900 on Sunday evening. But the rental agreement is good news too.
It is another sign that Tesla is going mainstream. Teslas can already be rented from some smaller firms, often in “off-airport” locations, but Hertz is a rental-car giant. If renting and then reselling used Tesla vehicles is success for it, other large rental-car companies will follow suit.
Fleet sales are a double-edged sword for auto makers. They are a source of consistent volume for a car company, but historically, investors have looked at sales to fleet operators as lower-quality, lower-margin volume. Investors don’t want them to account for too much of any auto maker’s sales.
For Tesla, the mix between fleet and retail sales is a question for down the road. For now, it is another small positive for the stock.
Tesla stock doesn’t seem to need more juice. Coming into Monday, shares were up about 40% over the past three months. That has added almost $300 billion in market capitalization to the stock. Stronger-than-expected vehicle deliveries and earnings have been the big positives.
Write to Al Root at [email protected]
