Elon Musk Comments That “No Contract Has Been Signed Yet” With Hertz

At this point it’s become widely known that Tesla (NASDAQ: TSLA) last week crested the $1.0 trillion market cap level, and then continued a run to beyond a valuation of $1.2 trillion. The massive move was conducted off the back of the news that Hertz had effectively entered a fleet purchase agreement with the company.

This, in theory, is bullish, as it demonstrates the growing acceptance of electric vehicles, while also representing a major order for the company. Further, it indicated that more consumers would become exposed to a Tesla, with the expectation that at least some would end up buyers of the product.

Following the initial release, a follow-on announcement two days later was made, whereby Uber (NYSE: UBER) would be using up to half of those vehicles, in a deal that would see its drivers rent Tesla’s from Hertz at preferred rates.

But now, that’s all been drawn into question following comments from Tesla CEO Elon Musk. Last night on Twitter, he made the following comment in reply to someone that posted the insane chart of the company’s stock performance.

“I’d like to emphasize that no contract has been signed yet,” are the words that make the entire situation confusing. This comes despite Hertz’s press release that states, “This includes an initial order of 100,000 Teslas by the end of 2022 and new EV charging infrastructure across the company’s global operations.”

Furthermore, regardless of this commentary, Uber and Hertz have since entered a deal related to the use of these vehicles which reportedly don’t have a purchase contract.

Now to be clear, with Elon then going on to suggest that the vehicles are being sold under the same economics as consumers receive access to, he may be referring specifically to a fleet sale, which traditionally occur at lower than retail price points. However, the emphasis on no contract being signed remains confusing at best.

Investors seem confused by it to, with the equity currently trading down $3.87 at $1,161 on the Nasdaq.

UPDATE: We’re throwing our hands up on this one. Hertz this morning indicated that it has already started receiving vehicles from Tesla under its current 100,000 vehicle order. So who knows what’s really happening at this point.

Information for this briefing was found via Edgar, Twitter and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply