Tesla joins the $1trn club
Electric vehicle maker has taken an order for 100,000 Model 3s from Hertz
Tesla has become just the fifth company to ever reach a market value of $1trn (£723.6bn) after striking a huge deal with Hertz. The hire car firm will pay $4.2bn (£3bn) for 100,000 Tesla Model 3s by the end of 2022.
Shares in electric car maker Tesla increased by 12.66% yesterday to close at $1,024.86 (£741.20). This is the first time the company’s share price has reached $1,000 a share, TechCrunch reported.
After the “hefty one-day gain”, Tesla surpassed the milestone valuation mark to join the “trillion-dollar club”, CNN said. Other members include tech giants Apple, Microsoft, Amazon and Google’s parent company, Alphabet. It is the second fastest company to hit $1trn, “reaching it just more than 12 years” after its initial public offering (IPO) in 2010, CNN added. Only Facebook got there faster, in nine years after its IPO.
Tesla has been the world’s most valuable car maker for some time, but brands like Ford and GM make more cars, the BBC said. For years it “struggled to ramp up production” and investors speculated it would fail. However, last year the company “upped its game and became profitable for the first time, prompting its shares to take off”.
Michelle Fleury, the BBC’s New York business correspondent, said Tesla has “just won major bragging rights” and its achievement is “all the more remarkable” for being the first car maker to hit the milestone.
EVs go mainstream
The deal for 100,000 Tesla Model 3s will push Hertz’s electric vehicle offerings to 20% of its global fleet and new EV charging infrastructure will be introduced across the company’s global operations. The Model 3s will show up in rental inventory as early as next month in major US markets and select cities in Europe, TechCrunch reported.
Electric vehicles are “now mainstream”, said Hertz interim CEO Mark Fields, and “we’ve only just begun to see rising global demand and interest”.
It’s the biggest-ever rental car order for electric vehicles and seen as a “further vote of confidence”, said the BBC.
A good week for Musk
Elon Musk’s week is “off to a great start”, said Forbes’s Eliza Haverstock. The deal with Hertz saw the Tesla CEO’s own personal fortune increase by $25.6bn (£18.5bn) and he is now worth $255.2bn (£184.6bn). Not only does Musk has a firm grasp on the No.1 spot of the top billionaires list but Forbes estimates he is also likely to be the “richest person to ever walk the planet”. Musk’s 23% stake in Tesla is now worth around $230bn (£166.4bn).
Musk and company are “being rewarded for anticipating the future direction of the industry”, said the BBC’s Fleury. It may be a car company, but Wall Street “treats it - and values it - like a tech company”.