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Elon Musk Tweets About Hertz Deal, Says No Contract Signed Yet

Remember when Hertz announced it will buy 100,000 Tesla vehicles by the end of 2022? Well, it appears that no contract has been signed yet between the two companies, as Elon Musk explained on Twitter. What does that mean to everyone else?
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Tom Brady Will Help Hertz Rent the 100,000 Teslas It Has BoughtTom Brady Will Help Hertz Rent the 100,000 Teslas It Has BoughtTom Brady Will Help Hertz Rent the 100,000 Teslas It Has BoughtTom Brady Will Help Hertz Rent the 100,000 Teslas It Has BoughtTom Brady Will Help Hertz Rent the 100,000 Teslas It Has BoughtHertz LogoElon Musk tweets and replies on TwitterElon Musk tweets and replies on TwitterElon Musk tweets and replies on Twitter
While Elon Musk did not address the issue in a dedicated tweet, but in a reply to another user, he did explain what was going on. As Musk himself noted in his reply to the account called Tesla Silicon Valley Club, if the increase is based on Hertz, he wanted to emphasize that no contract has been signed yet. That is surprising, if you think about it.

Musk went on to explain that demand for Tesla vehicles exceeds production, which means that the vehicles sold to Hertz will be traded at the same margin as to other customers. In other words, Elon does not plan to give any kind of discount for Hertz's massive order.

Moreover, Elon Musk went on to explain that the Hertz deal had a “zero effect” on Tesla's economics. Back in October, Musk commented another tweet that commented on the matter. He also underlined his opinion that it was strange that Hertz's announcement moved Tesla's valuation, as the company has a "production ramp problem" instead of a demand problem.

In other words, Tesla is now even more sought after despite Hertz's plans to buy 100,000 vehicles from the American automaker. With the entire discussion on the topic, the price of Tesla shares has rapidly increased by 33 percent after the initial announcement made by the company that specializes in renting vehicles to consumers.

After Musk's comments on the matter, the value of Tesla stock saw a small drop, which manifested itself in less than five percent of the highest price recorded after the Hertz announcement.

If Tesla does get to sign a deal with Hertz for the order of 100,000 vehicles, it could affect the company's delivery timetables for other customers. While some Twitter users speculated that Hertz might just order Tesla models one by one, it would be an unusual way to that many goods from a company.

Do not expect Hertz to buy 100,000 Tesla models on a one-by-one basis. It will be interesting to see how this plays out, though, especially since Tesla operates differently when compared to other automakers, especially when dealers are concerned.

Editor's note:

Photo gallery shows images of Tesla vehicles published by Hertz, as well as screen grabs of Elon Musk's tweets and replies on the matter.
 
 
 
 
 

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