Tesla value hits $US1 trillion as Hertz makes massive 100,000 EV order

Californian EV maker Tesla has officially joined the $US1 trillion ($A1.33 trillion) club, after its shares surged on Monday off the back of news that it has taken an order for 100,000 electric vehicles from car hire giant Hertz.

The new all-time-high value takes Tesla into the leagues of Google (Alphabet), Amazon, Apple, Facebook and Microsoft, and is the first manufacturing firm to attain such a market value.

It underscores the company’s position not merely as an automaker, but as a fully-fledged tech company that has engineered its own software chips in order to push the very edges of artificial intelligence and self-driving technology.

And it also underscores the lead it has over legacy car makers. Its increase in market value on just one day ($US100 billion), was more than twice the total market value of US auto giant Ford.

The new order was announced on Monday by Hertz, which filed for bankruptcy in the midst of the pandemic as some  700,000 cars sat idle. It came with an announcement that Super Bowl champion Tom Brady would be the face of a new marketing campaign.

All told, the order will make up more than 20% of Hertz’s global fleet, with a presence in 65 markets by the end of 2022, and 100 different market by the end of 2023, although it also underlined that the rollout of this will be dependent on the global semiconductor shortage and other supply chain difficulties.

“Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest,” said Hertz interim CEO Mark Fields in a statement.

“The new Hertz is going to lead the way as a mobility company, starting with the largest EV rental fleet in North America and a commitment to grow our EV fleet and provide the best rental and recharging experience for leisure and business customers around the world.”

Tesla CEO and co-founder Elon Musk took to Twitter on Monday night (US time) to clarify that the EV maker would sell the 100,000 vehicles to Hertz at full price.

Hertz says that Tesla Model 3s will be available to hire from early November in various US-based airports and suburbs as well as certain European cities, as well as install thousands of new chargers across its networks.

For drivers renting Tesla EVs from Hertz there will be a specialized experience to educate them on the new technology, as well as access to Tesla’s Supercharging network.

The record value comes only a week after Tesla reported its most production and profitable quarter. It puts Tesla’s value at more than the next 12 publicly listed automakers which combined make around 47 million cars a year compared to Tesla’s 500,000.

Last Wednesday (US time) Tesla said it is aiming to increase production by 50% per year with an eye to making 20 million electric vehicles a year.

Although Tesla also said it will only release new models once cell constraints had lifted, in a recent note to investors, analyst Adam Jonas of Morgan Stanley said he believes Tesla will sell a $15,000 electric car with the decade, of not by 2025.

Tesla shares jumped 12 per cent on the Hertz news to $US1,025 a share, or a market cap of $US1.04 trillion. Jonas has lifted his price target to $1200 a share from $US900 a share, with a “bull” prediction of $US1,600 a share.

The surge in value comes even as Tesla was forced to roll back its Full Self-Driving software from 10.3 to 10.2 early Monday morning (Australia time).

Tesla has been testing its autonomous driving system with a small number of beta testers for the past 12 months, and has recently begun to expand its beta rollout to drivers with a safety score of 100.

Musk tweetedon Monday night that version 10.3 which includes drivers with a safety score of 99 is now being rolled out again.