Hertz Global Holdings Inc.’s $4.2 billion deal with Tesla Inc. is about more than just an order for 100,000 cars. It’s about vaulting electric vehicles into the mainstream.
Not only does Tesla get a huge order at a premium price, it gets a way for the EV-curious masses to test-drive its Model 3. Hertz, meanwhile, gets to tap into the growing interest in EVs while aligning itself with the industry’s leader and sexiest brand. Tesla also will benefit from exposure in a splashy Hertz ad campaign starring seven-time Super Bowl Champion Tom Brady.
“This is an opportunity not only to fix the business, but also to employ a strategy that allows us to play a central role in development of the modern mobility industry,” Mark Fields, Hertz’s new interim chief executive officer and a former CEO of Ford Motor Co., said in an interview. “One of our objectives is to lead in the adoption of electric vehicles.”
Investors clearly thought the announcement was bigger than the financial terms alone.
The deal, first reported Monday by Bloomberg News, sent Tesla soaring to a $1.03 trillion valuation and added about $1.2 billion in market value for Hertz, which is just four months out of bankruptcy protection. Tesla shares rose 13 percent to a record $1,024.86, while shares in the rental-car company gained 10 percent to $27.17.
Even Tesla CEO Elon Musk said in Twitter post that he was a bit surprised by the “strange” jump in value, considering that his automaker’s already selling as many cars as it can make as it speeds up production.