Shares of Tesla jumped as much as 8% to new all-time-highs on Monday after Hertz said it acquired 100,000 Model 3 vehicles from the company.
That means by the end of 2022, a Tesla Model 3 will be an option for car-renters at Hertz locations across the country and in select cities in Europe.
Hertz's purchase is reportedly worth $4.2 billion for Tesla, suggesting few discounts were offered to Hertz in the deal. Rental vehicle companies are usually able to secure a sizable discount from automakers when purchasing such a large fleet of new vehicles.
Those usual discounts were likely off the table for Hertz given that Tesla is struggling to keep up with demand for its vehicles due to production shortfalls hampered by supply chain disruptions and semiconductor shortages.
Wedbush analyst Dan Ives said 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," according to a Monday note.
Hertz is now set to operate the world's largest EV rental fleet just months after it emerged from chapter 11 bankruptcy. The rental company said it hired NFL quarterback Tom Brady to headline a campaign highlighting the rollout of its Tesla-powered electric fleet, which will represent 20% of its overall vehicle fleet.
"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," Hertz interim CEO Mark Fields said.
The move from Hertz adds to the momentum building for Tesla stock in recent weeks. The stock benefited from record profits and revenue revealed in its third-quarter earnings report last week and is now within reach of a $1 trillion valuation. Tesla's market valuation stood at about $975 billion in Monday trades.
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Tesla rolled back the latest version of its autonomous driving software, called full self driving, or FSD. It’s a setback for Tesla. The decision will lead to questions about how Tesla introduces new features. It could also lead to some stock market volatility on Monday.
On Sunday, Tesla (ticker: TSLA) CEO Elon Musk tweeted about the decision to roll back version 10.3 of the company’s FSD software. “Seeing some issues with 10.3, so rolling back to 10.2 temporarily,” reads the tweet, adding. “this is to be expected with beta software.”
Tesla wasn’t available to comment on the decision Sunday afternoon.
Testing beta software on roads is the part of the company’s self driving program that might raise eyebrows with U.S. safety regulators. Drivers, and regulators, aren’t used to testing out new features on cars already bought. But Tesla has the ability to update features with over-the-air software updates.
The National Highway Traffic Safety Administration wasn’t available for comment Sunday afternoon.
Tesla believes its new features make cars safer. What’s more, it makes drivers qualify for new features by demonstrating safe driving. Still, releasing and then withdrawing the release a day or two later isn’t the outcome Tesla hoped for.
Tesla’s FSD is a so-called level 2 autonomous driving system. That means it requires drivers to stay engaged at all times. The updated software, essentially, adds new self driving features — like left turns across traffic. None of the updates allow drivers to stop paying attention.
Tesla owners who have qualified for the newer versions also reported Sunday that the rollback has removed versions 10 to 10.2 of the new FSD software. That wasn’t part of the Musk tweet and might have been unintended. Or, perhaps, drivers need to request the latest version of FSD software again.
The FSD hiccup might sap some of the recent strength from Tesla stock. Shares are up about 40% over the past three months. Shares hit a new 52-week high and closed at an all time-high above $909 a share Friday. Better than expected vehicle deliveries reported in early October and better than expected earnings reported this past week have boosted the stock.
Selling more cars is the biggest reason for recent gains. Self-driving software has the potential to add value to Tesla’s stock down the road. Tesla sells FSD as a $10,000 feature or as a monthly subscription today. Better versions of software with more features will mean more software sales for Tesla down the road.
Shares are now up about 29% year to date, better than the 21% and 17% comparable, respective returns of the S&P 500 and Dow Jones Industrial Average.
Toyota has once again topped the Interbrand’s Best Global Brands for 2021, which lists the most valuable brands in the world. This is the third consecutive year for the Japanese automaker to top the list.
Toyota claimed the top spot (among automakers) while placed at 7th position overall, with its brand value increasing by 5% year-on-year. Mercedes-Benz secured the second spot and 8th overall, with its brand value rising by 3%, while BMW again grabbed third position and 12th overall, with its value rising by 5%.
Among other automakers, Tesla was at 4th, Honda at 5th, Hyundai at 6th, Audi at 7th, Volkswagen at 8th, Ford in 9th and Porsche at the 10th position. Most interesting one among the Top 10 automotive brands is Tesla, which jumps from sixth to the fourth spot with an increase of 184% in value after having only re-entered the list a year before.
1. Toyota – $54,107 million
2. Mercedes-Benz – $50,866 million
3. BMW – $41,631 million
4. Tesla – $36,270 million
5. Honda – $21,315 million
6. Hyundai – $15,168 million
7. Audi – $14,474 million
8. Volkswagen – $13,423 million
9. Ford – $12,861 million
10. Porsche – $11,739 million
The Interbrand’s rankings are based on three key components that contribute to a brand’s cumulative value: the financial performance of the branded products and services; the role the brand plays in influencing customer choice; and the strength the brand has to command a premium price or secure earnings for the company.
Brands included in this list must meet several conditions, including having a significant presence in Asia, Europe, and North America, as well as geographic coverage in emerging markets. Additionally, at least 30% of revenue must come from outside of the brand’s home region, and there must be sufficient publicly available data on the brand’s financial performance. The economic profit must also be expected to be positive over the longer term, delivering a return above the brand’s cost of capital. Lastly, the brand must have a public profile and awareness across the major economies of the world.
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