Elon Musk puts a stop to Tesla’s (TSLA) rally, says Hertz deal is not signed and not a big deal

by Fred Lambert

November 2, 2021

Elon Musk has put a stop to Tesla’s (TSLA) historic rally by saying that the Hertz deal is “not signed” and adding that he doesn’t believe it has any effect on Tesla’s economics. Tesla’s stock (TSLA) rallied more than 55% over the last month alone.

It culminated in an 8% increase yesterday alone that saw Tesla’s valuation surging to $1.2 trillion. However, this morning, Tesla’s rally has officially stopped with the stock being down 5% in pre-market trading. The significant decline comes after a tweet from Elon Musk in the middle of the night.

A Twitter user thanked Musk for the stock price increase, and while the CEO responded by seemingly accepting credit at first with a “you’re welcome,” he quickly poured cold water on the rally by saying that the Hertz deal shouldn’t have this kind of impact:

The CEO said that “no contract has been signed” on the Hertz deal and it shouldn’t have a strong effect on Tesla’s economics since the company is production constrained: “If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet. Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers. Hertz deal has zero effect on our economics.”

When the rally first started, Musk had already pointed out that it wouldn’t accelerate Tesla’s overall deliveries as the company is constrained by production, not demand.

Electrek‘s take The first part of Musk’s comment is a bit concerning since Hertz made it clear that they “placed” an order with Tesla for 100,000 Model 3 vehicles. They have already taken deliveries of some of them.

Long term, once those vehicles are in operation both in Hertz and Uber’s fleets, it will help get more people to try electric cars and accelerate the market shift toward electric vehicles. It’s also going to encourage other large fleet managers to think bigger when it comes to electrifying their fleets.

It’s just another signal that if you are thinking about buying a new car, like Hertz, you should think about buying an electric car.