(Bloomberg) – Tesla Inc. shares tumbled after billionaire Elon Musk questioned Hertz Global Holdings Inc.’s plan to buy 100,000 electric vehicles for its rental car fleet and downplayed the potential of the agreement.
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The Model 3 maker has yet to sign a contract with Hertz, the CEO wrote in a tweet on Monday, in response to a fan club account thanking the richest person in the world for recent gains in Tesla shares. . Musk also said that because Tesla has a demand for more vehicles than it can produce, the deal with Hertz “has no effect on our economy.”
Tesla fell 5.2% at 10:58 a.m. on Tuesday, while Hertz rose 15% after an initial drop. Shares of both companies have skyrocketed since Hertz unveiled its initiative on October 25. Tesla gained 56% over the past month, pushing its market value above $ 1 trillion, while Hertz had jumped 38% after the announcement until Monday’s close.
Hertz said on Tuesday he was already receiving cars as part of his $ 4.2 billion plan to add Teslas until 2022, without responding directly to Musk’s tweet. The order is about a tenth of what Tesla can produce annually. Its shares rebounded from earlier losses after rival Avis Budget Group Inc. hit a record high in a frenzy fueled by retail traders.
“As we announced last week, Hertz has placed an initial order for 100,000 Tesla electric vehicles and is investing in new electric vehicle charging infrastructure across all of the company’s global operations,” Hertz said in a statement. press release sent by email on Tuesday. “Teslas deliveries have already started. We are seeing very strong early demand for Tesla in our rental fleet, which reflects the market demand for Tesla vehicles. “
Hertz, based in Estero, Fla., Had previously said it would pay top dollar for the vehicles.
“Initial interest is exceeding our expectations,” Hertz interim CEO Mark Fields said last week as traffic to the company’s website skyrocketed, particularly to its Tesla rental portal. “It shows that our message got through.”
Monday’s tweet wasn’t the first time Musk has questioned the market’s reaction to the Hertz deal. He wrote on Oct. 25 that Tesla’s valuation change was “odd” as he said the company was facing production issues, not demand.
He has also depressed Tesla shares previously, tweeting in May 2020 that his stock price was “too high” in his opinion.
(Updates with Avis push in fourth paragraph)
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