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Musk says Tesla has not signed a contract with Hertz yet, halts stock rally

Musk says Tesla has not signed a contract with Hertz yet, halts stock rally

SpaceX owner and Tesla CEO Elon Musk speaks during a conversation with legendary game designer Todd Howard (not pictured) at the E3 gaming convention in Los Angeles, California, Jun 13, 2019. (Photo: REUTERS/Mike Blake)

Tesla's top boss Elon Musk said the company had not signed a contract with Hertz, more than a week after the car rental firm announced a massive deal with the electric carmaker.

Tesla's shares fell 4 per cent in early trading on Tuesday, after a steep jump following the news of the biggest-ever order - 100,000 electric cars for Hertz - on Oct 25, which helped Tesla breach US$1 trillion in market capitalization.

Musk tweeted late Monday, "If any of this is based on Hertz, I'd like to emphasise that no contract has been signed yet."

"Hertz deal has zero effect on our economics."

Tesla did not immediately respond to a request for comment.

However, Hertz said in a statement that the deliveries of the Teslas had already started.

"We are seeing very strong early demand for Teslas in our rental fleet, which reflects market demand for Tesla vehicles."

Hertz's interim Chief Executive Officer Mark Fields had told Reuters last week the order will primarily include Model 3 vehicles. Considering Tesla's cheapest Model 3 sedan starts at about US$44,000, the order could be worth about US$4.4 billion, if the entire order were for the mass-market sedan.

"Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers," Musk said.

Separately, Tesla is recalling nearly 12,000 US vehicles sold since 2017 because a communication error may cause a false forward-collision warning or unexpected activation of the automatic emergency braking system, the National Highway Traffic Safety Administration said.

Source: Reuters

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