Billions Lost After Musk Downplays Hertz Deal

Tesla’s (NASDAQ: TSLA) share price slipped on Tuesday after Elon Musk said late on Monday that the EV manufacturer hadn’t yet signed a contract with Hertz for the single largest order for electric vehicles in the world.

Tesla hit the $1-trillion market value last week after car rental giant Hertz said it had placed an order for 100,000 Teslas by the end of 2022.

In one week since that announcement, Tesla’s market cap had grown by around $300 billion, but it was set to shed some of that gain as shares were down by more than 4%, or $51 apiece, early on Tuesday.

The share price drop came after Musk wrote on Twitter on Monday, commenting on Tesla’s market performance:

“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. Hertz deal has zero effect on our economics.”

Hertz said on October 25, “As consumer interest in electric vehicles (EV) skyrockets, Hertz today is announcing a significant investment to offer the largest EV rental fleet in North America and one of the largest in the world. This includes an initial order of 100,000 Teslas by the end of 2022 and new EV charging infrastructure across the company’s global operations.”

The order would be worth $4.2 billion in revenues for Tesla, according to estimates last week.

On the day of Hertz’s announcement, Tesla’s market capitalization shot past the $1-trillion mark, and Musk added another $36 billion and change to his net worth, which now exceeds the market cap of oil supermajor ExxonMobil.

According to the Bloomberg Billionaires Index, as of November 2 before the market opened, Musk’s total net worth was $335 billion, while Exxon’s (NYSE: XOM) market capitalization was $277.85 billion.