Tesla Inc on Monday crossed $1 trillion in market capitalization as the business founded by Elon Musk welcomed its biggest-ever order from Hertz, which declared plans to buy 100,000 electric rental cars. Tesla surpassed a market value of $1 trillion on Monday, giving it the fifth place such firm to touch the milestone.
Shares in the electric carmaker escalated 12.6% after it uncovered a deal to sell 100,000 vehicles to the car rental brand Hertz. Tesla has been the world’s most worthy carmaker for some time, but labels like Ford and GM make more cars. Earlier, only Apple, Microsoft, Amazon and Google-parent Alphabet have entered a $1tn valuation.
For years, Tesla struggled to ramp up for manufacturing of its cars, leading some investors to contemplate it would fail. But last year the company, headed by billionaire Elon Musk, elevated its game and grew profitable for the first time, prompting its shares to take off.
On Monday, Tesla shares began up 4.5% at $950.53, a fresh record high, following the order. Shares were also buoyed by news of the company’s Model 3 displaying as the first electric vehicle to top monthly sales of new cars in Europe.
In an interview, Interim Hertz Chief Executive Mark Fields stated to Reuters, the order delivered by the end of 2022 will mainly be Model 3 vehicles. Tesla cars will begin being available at Hertz rental facilities in November.
“We absolutely believe that this is going to be a competitive advantage for us,” Fields said of the Tesla order. “We want to be a leader in mobility… Getting customers to experience with electrified vehicles is an absolute priority for us.”
Hertz has about 430,000 to 450,000 vehicles worldwide, Fields told. He said Hertz would operate with other automakers offering electric vehicles. Hertz will spend $4.2bn for 100,000 Model 3s over the following 14 months, which amounts to nearly a fifth of its fleet. The car rental firm will also develop a network of charging stations.
Teslas have a reach of about 320 km (200 miles) per charge, but there is a shortage of charging infrastructure in the US – something the current government expects to change.
“Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest,” stated Hertz interim Chief Executive Officer Mark Fields.
Hertz had listed for bankruptcy protection last year as the travel market sank throughout the height of the pandemic and talks with lenders failed to provide support.
It was rescued by a group of investors, including Knighthead Capital Management, Certares Opportunities and Apollo Capital Management.