Hertz orders 100,000 EVs sending Tesla shares to $1-trillion

Having survived a brush with death, Hertz is aiming for an electric rebirth. The rental car company, which filed for Chapter 11 bankruptcy protection early in the COVID-19 pandemic, announced Monday that it plans to buy 100,000 cars from Tesla by the end of 2022 in a pivot toward electric vehicles in a deal estimated to be worth 4.2 billion dollars (3.62 billion euros). And it is among the largest electric vehicle orders ever placed, matching the 100,000 electric vans that Amazon has ordered from start-up Rivian.

Hertz also plans to install thousands of electric vehicle charging stations at its locations. The moves represent the largest investment by a rental car agency in technology widely considered the future of the automotive business but still viewed with caution by many Americans worried about running out of battery power while driving. It’s also a concrete sign of where interim CEO Mark Fields, a former CEO of Ford Motor Co., plans to take Hertz as the rental car agency tries to reinvent itself.

And it comes as rental car companies are starved for vehicles, having sold off big chunks of their fleet in 2020 to conserve cash when travel slowed to a halt as COVID-19 began to spread. With limited fleets, prices for rental cars have skyrocketed across the industry as demand picked up. Hertz said it would provide Tesla Model 3 compact cars for rent at airport and neighborhood locations in major markets and certain European cities beginning in early November.

Teslas will make up more than 1 in 5 Hertz vehicles worldwide, though the company acknowledged that a global chip shortage could constrain the availability of vehicles. Fields in an interview said that the company chose Tesla because of its majority market share in EV sales. But he said the company is not forming an exclusive relationship with Tesla and that it plans to buy EVs from other automakers in the future.

“It is just the start for Hertz,” Fields said. “We’re very much now looking to the future.” But will customers feel comfortable that they won’t run out of battery power? That condition, common among EV skeptics, is known as range anxiety. That’s why Hertz is also installing charging stations at Hertz locations in about 65 markets by the end of 2022 and more than 100 by the end of 2023, Fields said.

“We want to make customers feel not anxious about range anxiety and that they can charge their vehicles,” he said. Renters will also have access to Tesla’s network of more than 3,000 dedicated charging stations known as Superchargers. The company also announced Monday that it had hired NFL star Tom Brady to help market its EV push.

Hertz first introduced EVs into its fleet in 2011. Tesla’s stock rose 4.4% in pre-market trading to $949.47. Hertz recently announced plans to go public. While Hertz is in the early stages of electrifying its rental car fleet, Tesla getting an order of this magnitude highlights the broader EV adoption underway in our opinion as part of this oncoming green tidal wave now hitting the U.S. The deal is a “major feather in the cap” for Tesla.