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Just months after bankruptcy, Hertz says it will buy 100,000 Teslas for new electric fleet

Shares of Tesla surged on Monday, with the Hertz deal expected to net the electric car maker more than $4 billion.
Hertz Offers Special Rental Rates To Uber And Lyft Drivers
Hertz will order 100,000 Tesla vehicles to build an electric rental fleet.Spencer Platt / Getty Images file

With football superstar Tom Brady set to pitch the deal, Hertz plans to field 100,000 Tesla electric cars through its North American and European rental car fleets.

The move will position the rental company as the largest source of electric vehicle rentals in the U.S., and one of the biggest in Europe, at a time when electric vehicles are beginning to gain real traction. In turn, it could help not just Tesla, but the auto industry overall, by increasing awareness of what today’s latest electric vehicles can do.

The one-time rental car leader declared bankruptcy in May 2020, re-emerging 13 months later. Earlier this month, it announced that former Ford CEO Mark Fields would come on board as its interim chief executive.

"Electric vehicles are now mainstream, and we've only just begun to see rising global demand and interest," Fields said in a statement on Monday. "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."

The deal could be a double-edged sword for Tesla, and lead to market saturation.

To help get the message across, Hertz said it is “teaming up” with Tom Brady, the seven-time Super Bowl champion. Two ads featuring Brady — and using his familiar game day “Let’s Go” rallying cry — will begin airing as of Monday. Customers already can begin scheduling Tesla rentals through Hertz.

Hertz will add 100,000 Teslas — primarily the Model 3 — to its fleet by the end of 2022, Fields said in a statement. It also will set up a network of 3,000 quick chargers in 65 markets by the end of next year. Customers will also have access to Tesla's own Supercharger network.

Tesla stock surged Monday, propelling the electric car maker's valuation closer to $1 trillion.

The deal is “non-exclusive,” Hertz spokesman Ray Day told NBC News, adding that the rental company “is open to working with all automakers.”

While Day declined to say if Hertz currently is negotiating deals with other manufacturers, it would have plenty of options to choose from. There were 13 BEVs on sale in the U.S. at the end of the 2021 model year.

While electric models currently make up less than 3 percent of the U.S. market, demand more than doubled during the first half of 2022 as more and more new models came to market. In Europe, demand is growing even faster, with Tesla's Model 3 the top-selling vehicle last month, according to data out Monday from Jato Dynamics research firm.

President Joe Biden is pushing to have electric vehicles make up between 40 to 50 percent of new sales in the U.S. by 2030. California, New York and Washington have all set up timetables for completely banning vehicles using internal combustion engines. So have Britain and Norway, with several other European countries considering similar moves.

By putting vehicles into the Hertz fleet, Tesla should be able to increase its brand awareness at a time when it is preparing to open two new assembly plants in Texas and Germany, roughly doubling its production capacity, said analyst Stephanie Brinley of IHS Markit.

“Tesla is probably the only manufacturer that could deliver this many (electric vehicles) this quickly,” she said.

But the deal could prove to be “a double-edged sword,” cautioned Sam Abuelsamid, lead automotive analyst with Guidehouse Insight. “Putting a lot of vehicles into a rental fleet gives your products a lot of exposure to potential customers. But it can create over-exposure and hurt your resale values."