A deal for Hertz to buy 100,000 Tesla vehicles isn’t signed yet, CEO Elon Musk tweeted as he questioned the stock-market rally for the electric vehicle maker that has ensued.
has surged past $1 trillion in market cap since the Oct. 25 announcement that Hertz will buy Model 3 vehicles, and also install thousands of electric-vehicle chargers.
“If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet,” Musk tweeted in response to a chart of the stock price from the widely followed Tesla Silicon Valley Club account.
“Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers,” added Musk, who according to Bloomberg now has three times the net worth of Berkshire Hathaway
Chairman and CEO Warren Buffett. “Hertz deal has zero effect on our economics.”
There was further bad news for Tesla shareholders with a regulatory filing showing a recall of nearly 12,000 vehicles because of a communication error that may cause unexpected activation of the emergency brake system.
Tesla shares fell 2% in early trade.
Analysts had praised the impact of the Hertz deal on Tesla. The $4.2 billion order was considered by some a tipping point for electric vehicle demand, and gives the opportunity for potential drivers to try out a Tesla while travelling.
In a brief statement, Hertz said it’s already started to receive Tesla vehicles.
“As we announced last week, Hertz has made an initial order of 100,000 Tesla electric vehicles and is investing in new EV charging infrastructure across the company’s global operations. Deliveries of the Teslas already have started. We are seeing very strong early demand for Teslas in our rental fleet, which reflects market demand for Tesla vehicles,” the company said.
The rental company put a section on Tesla as a risk factor in its 10-K dated Oct. 28. It warned not just of the risk of the concentration of such vehicles in its fleet, but the “economics ultimately associated with [electric vehicles], including depreciation and residual values, which will impact the attractiveness of our EVs to rideshare drivers,” the company said.