Tesla CEO Elon Musk insisted no formal contract has been signed with Hertz, after the car-rental company announced a deal to buy 100,000 electric vehicles in an overhaul of its fleet.
The deal, announced Oct. 25, sent Tesla stock soaring to an all-time high and pushed its valuation above $1 trillion for the first time.
However, responding to a tweet about the blockbuster rally, Musk said Monday evening, “If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet.”
“Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers,” he added.
“Hertz deal has zero effect on our economics.”
Musk’s dose of cold water on the deal sent Tesla stock down over 5 percent to $1,147.64 by 6:30 a.m. ET on Tuesday. The stock’s still up more than 12 percent since the announcement of the Hertz deal.
At the time of the announcement last week, Tesla did not put out a statement nor did anyone from Tesla provide a statement in a press release issued by Hertz.
Still, Hertz interim CEO Mark Fields, the former chief executive of Ford, hailed the deal as the start of what he called “the new Hertz” and said the company plans to order more electric cars in the years ahead.
The embattled car-rental company, which emerged from bankruptcy in June under new owners, also released a new marketing campaign featuring NFL legend Tom Brady in which he touted the electric fleet.
Analysts quickly touted the deal, saying that it would help get more customers to embrace electric cars.
“While Hertz is in the early stages of electrifying its rental car fleet, Tesla getting an order of this magnitude highlights the broader EV adoption underway in our opinion as part of this oncoming green tidal wave now hitting the US,” Dan Ives, managing director at Wedbush Securities, said in a note.
“This Hertz deal is a ‘major feather in the cap’ for Tesla and speaks to where demand is heading in the EV transformation hitting the auto sector globally.”
Musk, for his part, sought to downplay the significance of the deal almost from the start.
“Strange that moved valuation, as Tesla is very much a production ramp problem, not a demand problem,” he said on Twitter the day of the announcement.
He later added that the cars sold to Hertz would not come with a discount, as many large sales to rental companies often do in the auto industry.
Shortly after the announcement of the deal, Hertz said it would rent out up to half of the electric cars to Uber drivers by 2023.
Hertz noted that its ambitions with electric cars could be limited by industry-wide factors such as production issues like the semiconductor chip shortages, which have wreaked havoc in the auto industry this year.