Elon Musk Says Tesla-Hertz Deal Has No Contract

Matt Posky
by Matt Posky
elon musk says tesla hertz deal has no contract

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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4 of 35 comments
  • Speedlaw Speedlaw on Nov 03, 2021

    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.

  • Islander800 Islander800 on Nov 03, 2021

    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...

    • Dal20402 Dal20402 on Nov 03, 2021

      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.

  • SCE to AUX Probably couldn't afford it - happens all the time.
  • MaintenanceCosts An ugly-a$s Challenger with poor equipment choices and an ugly Dealership Default color combination, not even a manual to redeem it, still no sale.
  • Cha65689852 To drive a car, you need human intelligence, not artificial intelligence.Unfortunately, these days even human brains are turning into mush thanks to addiction to smartphones and social media.
  • Mike1041 A nasty uncomfortable little car. Test drove in 2019 in a search for a single car that would appease two drivers. The compromise was not much better but at least it had decent rear vision and cargo capacity. The 2019 Honda HRV simply was too unforgiving and we ditched after 4 years. Enter the 23 HRV and we have a comfy size.
  • SCE to AUX I wonder who really cares about this. "Slave labor" is a useful term for the agendas of both right and left."UAW Wants Auto Industry to Stop Using Slave Labor"... but what will the UAW actually do if nothing changes?With unrelenting downward pressure on costs in every industry - coupled with labor shortages - expect to see more of this.Perhaps it's my fault when I choose the $259 cell phone over the $299 model, or the cheaper parts at RockAuto, or the lower-priced jacket at the store.Do I care about an ethical supply chain? Not really, I just want the product to work - and that's how most consumers are. We'd rather not know.Perhaps the 1990s notion of conflict-free, blood-free, ethically-sourced diamonds will find its way into the auto industry. That would be a good thing.