By on November 2, 2021

Tesla shares took a dip on Tuesday after Tesla CEO Elon Musk tweeted that its deal to provide Hertz with 100,000 electric vehicles had not been ratified with the signing of a contract. While this normally means the deal had not been finalized, the language used by Musk almost makes it sound like whatever Hertz had been claiming previously didn’t even matter.

“You’re welcome! If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet,” the CEO said in reference to Tesla’s share price pitching upwards by over 8 percent. “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.”

Meanwhile, Hertz stated that its plan to purchase 100,000 Tesla Model 3s by the end of 2022 was still on. Most had presumed the rental agency had entered into an agreement to buy the vehicles at feet discount. But there were no official details pertaining to the deal’s finances released at the time of the original announcement.

Interim Hertz CEO Mark Fields has said that Tesla products are already arriving at locations around the country. The company is obviously committed to buying up EVs as a way to pad out its fleet after selling off more cars than normal during a trying 2020 that included Hertz filing for Chapter 11 bankruptcy. As a byproduct, it also gets social brownie points by pretending that buying a bunch of zero-emission vehicles means its actively saving the environment while helping to spur on the electric revolution. This may likewise help future proof its fleet from governments interested in applying incentives to companies prioritizing EVs and punishing those that retain internal combustion.

Tesla’s goals are a little harder to pin down. Musks’ chatter kind of jeopardizes what Hertz is trying to do by making it seem as though there never was a deal in the first place. If no contract was signed, maybe there never was any agreement and Hertz is simply trying to capture some of Tesla’s buzz while putting it in a position where it felt obligated to offer a bulk discount. One could even argue it would have been in the automaker’s best interest to play along so it could ride the wave on the stock market.

But the deal would have been worth a few billion and it arguably harms Hertz more to abandon the plan than Tesla. The automaker has repeatedly stated that it wants to raise capacity to it can cope with demand, so there’s not much reason for it to pursue fleet sales at this juncture. Our best guess is that Elon was publicly trying to negotiate a better deal with Hertz prior to the contract being finalized or simply called the rental agency’s bluff about an agreement that never officially existed. The only other avenue to go down with this is Musk attempting to game the market by depositing a bit of news that would momentarily spike its previous gains into the dirt.

Listen, it would be wrong to outright say that Elon Musk has figured out how to use his status and platform to manipulate the market. But I would be a moron to not heavily imply that was the case after watching how his often-unnecessary comments impact the valuation of stocks and crypto currencies. Then again, perhaps I’ve found myself entertaining ridiculous theories and it only seems like the richest person on the planet’s skillset includes influencing finances on a macro level.

Regardless, it’s impossible to say whether or not that’s what happened here. Tesla’s stock price resumed an upward trajectory after taking a nearly 2-percent dip early on Tuesday, immediately after Elon Musk’s statements on twitter gained traction in the media. Assuming he was looking to move the market, this represents one of his lesser showings. Hertz shares also dipped slightly. But the company’s valuation is still riding high after last week’s announcement that it would be buying up 100,000 EVs.

[Image: Hertz]

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35 Comments on “Elon Musk Says Tesla-Hertz Deal Has No Contract...”


  • avatar
    SCE to AUX

    It was reported to be a $4.2 billion deal. Did someone in the media just make that up?

    An alternate theory about this story: Maybe Hertz wants to diversify its EV offerings.

    • 0 avatar
      mcs

      “An alternate theory about this story: Maybe Hertz wants to diversify its EV offerings.”

      I think Hertz actually did state that at some point.

    • 0 avatar
      Greg Hamilton

      SCE,

      “Did someone in the media just make that up?” That could never happen.

    • 0 avatar
      Matt Posky

      Hertz never gave any financial information and technically only said it would be ordering 100,000 vehicles from Tesla. The $4.2 billion expenditure was an estimation based on the volume, though several mainstream outlets did report it as a $4-billion deal” between the two companies (e.g. NBC News headline from Oct 27th: “After $4 billion deal with Tesla, Hertz says it will rent out half those cars to Uber drivers”)

  • avatar
    Scoutdude

    “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.”

    That is some funny stuff as they will sell a LR AWD Model y to my state or any gov’t agency in my state for about $4k less than list price. For some reason they didn’t bid the Model 3 for the 22MY but for the 21MY the contract rate was again about $4k less than the base price and in both cases that is a delivered to the door.

    • 0 avatar
      96redse5sp

      @scoutdude…

      Can you think of any reason – any ulterior motive – that Musk might have to want to play footsie with state and federal government officials?

  • avatar
    beachy

    Can we please have articles about electric cars written by someone besides Matt Posky?

  • avatar
    Master Baiter

    “…therefore we will only sell cars to Hertz for the same margin as to consumers.”

    Musk gets away with saying things that would get any middle manager at Tesla fired instantly.

    • 0 avatar
      bullnuke

      Well, seeing as he’s not a middle manager, he can probably say whatever he wants. He may or may not be telling the truth but that’s between him and Hertz.

      • 0 avatar
        Master Baiter

        “he can probably say whatever he wants…”

        No, he can’t. Per the SEC, forward looking financial statements are regulated. He’s gotten in trouble for this in the past.

        • 0 avatar
          96redse5sp

          @Master Baiter

          Yes he can. Trump has said all kinds of shit and has gotten away with it. You think he’s scared of the SEC? Do you think he’s ever suffered any serious, lasting repercussions from anything he’s ever said? If anything, SEC actions and inactions have proven to Musk that there are no real consequences…

          • 0 avatar

            EM says what he wants, discloses what he shouldn’t, breaks product promises, hypes concepts as real, and releases dangerous unfinished product upon consumers.

            And those actions have proved to him over and over there is absolutely no consequence for anything he says or does, so he may as well keep at it.

          • 0 avatar
            islander800

            Yea, kinda like politicians getting a pass on fomenting insurrections- it just encourages them to keep it up…

          • 0 avatar
            28-Cars-Later

            Kinda like politicians supporting riots and destruction and then it being memory holed by State Media.

    • 0 avatar
      96redse5sp

      Any middle manager with the chutzpah, the business acumen, and the promotion and self-promotion skills of Elon Musk would not be stuck in middle-management.

  • avatar
    dal20402

    Somewhere in an anonymous building about half a mile away from central Washington, DC, a very tired SEC lawyer is tinkering with words in what has to be the 87th request for documents to Tesla in connection with a Musk tweet.

  • avatar
    Lie2me

    “People play games, my friend”

    – Jim Jones, Jonestown, Guyana

  • avatar
    Land Ark

    Now Hertz saying they have already started getting the cars in – contract or no contract – the plot thickens! OR… more likely, I never think about it again.

    https://www.cnbc.com/2021/11/02/hertz-says-teslas-already-started-delivering-cars-despite-musk-tweet.html

    But hey, I’m not upset about how TSLA has done in the last month. If it keeps going at this pace, forever, without a correction, until I die, I could quit working!

  • avatar
    EBFlex

    Maybe Hertz came to their senses and decided not to buy horribly cheap and problematic appliances.

  • avatar

    That’s why I do not read newspapers, do not watch TV, ignore Twitter and Facebook. If Trump is banned from Twitter why Musk is not? I am tired of all that noise.

  • avatar
    wjtinfwb

    Hertz was on deaths door 12 months ago, fire-sale’d inventory and laid off staff and closed locations. So, where does the money come from to by 4 billion dollars of cars? Was Elon going to finance the purchase, effectively becoming Tesla’s version of GMAC which, even today, are a asset that depreciated heavily? Was private equity involved? Seems like a pretty risky deal for investors who typically prefer real estate or technology, not business services like rental cars. As with most everything else, following the money will lead to the truth, is anyone investigating the financing?

    • 0 avatar
      Lie2me

      I don’t know for sure, but under the circumstances it would not surprise me if Hertz qualified for a large government pandemic loan. Seams like a textbook case

  • avatar
    FreedMike

    Tesla is not going to walk away from this sale. I think this is just more of Musk being Musk.

  • avatar

    First year law school: An agreement to agree is NOT a contract, just happy talk over drinks.

    Also, a co-signer is a schumuck with a pen.

    • 0 avatar
      EBFlex

      Tell that to all the whining schmucks throwing tantrums over dealer markups on their Broncos when they never signed a purchase agreement.

      https://jalopnik.com/a-bronco-reservation-holder-tried-to-go-up-against-a-fo-1847904601

  • avatar
    islander800

    This smart ass should just keep his big yap shut – unless he’s gunning for another hefty fine from the SEC. I’m sure his lawyers have advised him to watch his mouth but he’s likely told them to bugger off since he’s so much brighter than they are…

    • 0 avatar
      dal20402

      As a lawyer who occasionally represents very wealthy clients, I can tell you that they don’t want to hear “no” from us, they just want an assessment of risks. Sometimes they are told “that’s risky” and they do it anyway.

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