Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Hertz Orders 100,000 Teslas in Rental-Market Shake-Up

Stock Markets Oct 25, 2021 08:54AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

(Bloomberg) -- Hertz Global Holdings (OTC:HTZGQ) Inc., barely four months out of bankruptcy, placed an order for 100,000 Teslas in the first step of an ambitious plan to electrify its rental-car fleet, according to people with knowledge of the matter.

It’s the single-largest purchase ever for electric vehicles and represents about $4.2 billion of revenue for Tesla (NASDAQ:TSLA) Inc., according to the people, who asked not to be identified because the information is private. While car-rental companies typically demand big discounts from automakers, the size of the order implies that Hertz is paying close to list prices. 

The cars will be delivered over the next 14 months, and Tesla’s Model 3 sedans will be available to rent at Hertz locations in major U.S. markets and parts of Europe starting in early November, the people said. Customers will have access to Tesla’s network of superchargers, and Hertz is also building its own charging infrastructure, they said. 

The electrification plan, which eventually will encompass almost all of Hertz’s half-million cars and trucks worldwide, is the company’s first big initiative since emerging from bankruptcy in June. And it signals that Hertz’s new owners, Knighthead Capital Management and Certares Management, are intent on shaking up an industry dominated by a handful of large players who are typically slow to change.

Tesla shares surged as much as 4.3% in premarket trading in New York, continuing the automaker’s push toward a $1 trillion valuation. There was no early movement in Hertz, which trades over the counter ahead of its relisting on the Nasdaq Stock Market.

By locking up so much of Tesla’s production -- the order is equivalent to about 1/10 of what the automaker can currently produce in a year -- Hertz may box out rivals from copycatting the strategy. Hertz also is breaking with tradition by paying full price for well-appointed cars rather than the typical base-model, heavily discounted sedans that populate rental lots.

A spokesman for Hertz declined to comment. Tesla didn’t immediately reply to a request for comment.

In 2020, General Motors Co (NYSE:GM). was Hertz’s biggest car and truck supplier, followed by Nissan (OTC:NSANY) Motor Co. and Ford Motor (NYSE:F) Co. 

Teslas, with zero tailpipe emissions, will appeal to rental customers who want a green option or those eager to try out an battery-powered vehicle. Hertz may look to EVs because they’re less expensive to maintain and refuel, and they typically don’t lose as much value in the resale market as vehicles with internal combustion engines.

READ: Tesla Target (NYSE:TGT) Hiked at Morgan Stanley (NYSE:MS) After ‘Extraordinary’ Sales

Earlier this month, Knighthead and Certares brought on Mark Fields, the former chief executive officer of Ford, as interim CEO of Hertz. They’ve also hired Tom Brady, the seven-time Super Bowl-winning quarterback, to star in Hertz ads showcasing the new Teslas, the people said.

Along with the Tesla rollout, Hertz, the biggest U.S. car-rental company after Enterprise Holdings Inc., is embarking on a broader revamp of its business around mobility and digitization, the people said. One component of that will be expedited rental bookings on the Hertz app.

Wild Journey

Electrification is the latest turn in Hertz’s wild journey through the Covid-19 pandemic. When demand for rental cars collapsed in early 2020, the company, whose brands also include Dollar, Thrifty and Firefly, was forced to file for bankruptcy and began liquidating its fleet.

Now, 17 months later, Estero, Florida-based Hertz is thriving thanks to a sharp rebound in travel and the global shortage of new cars. Day traders have embraced it as a meme stock.

As of June 30, Hertz had $1.8 billion in cash and its debt-to-equity ratio, a key measure of financial health, had improved to 2.4 from almost 10 at the end of 2019, according to an Oct. 15 regulatory filing.

Knighthead, a distressed-debt hedge fund, and Certares, a private equity firm specializing in travel, won the bankruptcy auction for Hertz in May with a $6 billion bid. It already looks like a bargain: The company has a market value of $11.6 billion in over-the-counter trading ahead of its relisting on the Nasdaq Stock Market.

(Updates with share price in fifth paragraph.)

©2021 Bloomberg L.P.

Hertz Orders 100,000 Teslas in Rental-Market Shake-Up
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Glenn Ebersole
Glenn Ebersole Oct 27, 2021 8:06AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Crazy..who absorbs bankruptcy. Two losers don't equal 1 winner. Time tells?
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email