The Washington PostDemocracy Dies in Darkness

Elon Musk says Tesla has not signed contract with Hertz. Hertz says car deliveries have already started.

Separately, the automaker will recall 11,700 vehicles in connection with a software flaw that inadvertently activates the braking system.

Elon Musk, chief executive of Tesla, as seen in July. (Al Drago/Bloomberg)
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Chief executive Elon Musk seemed to question the big jump in Tesla stock that followed his car company’s announced deal with Hertz, saying in a tweet that “no contract has been signed yet.” But Hertz countered that deliveries have already started.

Musk had been responding to a tweet showing Tesla shares closed Monday up 8.5 percent. “You’re welcome!” he wrote, “If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet.”

He was referencing last week’s announcement that Hertz would buy 100,000 Teslas by the end of 2022 to help the rental car company build out its electric vehicle fleet — news that catapulted Tesla’s market capitalization above $1 trillion for the first time.

The deal had “zero effect on our economics,” he continued, noting that, “Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers.”

It’s unclear what, if anything, this means for deal. Hertz has already filmed a commercial with NFL star Tom Brady. And on Tuesday, its communications director, Lauren Luster, said that deliveries had begun for the company’s “initial order” and that it is similarly investing in electric vehicle-charging infrastructure.

In late October, Hertz chief executive Mark Fields said his company’s largest investors had been in touch with Tesla for months. Hertz, which also operates the Dollar and Thrifty brands, was hit hard in the early days of the pandemic, which gutted business travel and demand for rentals. It filed for bankruptcy in May 2020 and only recently emerged from it.

Fields says he wants to get a head start on a world where electric vehicles are the norm.

“We are going to become experts at managing large electrified fleets well before our competition,” Fields said on CNBC’s “Squawk Box.”

Tesla shares fell sharply Tuesday, closing near $1,172, down 3.0 percent. Hertz, meanwhile, spiked 5.9 percent to end the session above $36.

Analysts say it’s hard to imagine what Musk would gain from undermining a deal with Hertz. If it were to pay $43,990 for a Model 3, as listed Tesla’s website, the deal would be worth well over $4 billion to the carmaker. Gene Munster of Loup Ventures says it plays into a broader pattern of unpredictability that investors have learned to live with.

Last May, Musk tweeted that his company’s stock price was too high, sending the price diving. In 2018 he lost his chairman title after saying he had secured funding to take Tesla private at $420, an apparent marijuana joke, and seemed to later double down by smoking a joint on Joe Rogan’s podcast.

“What we’ve learned time and again ― from Joe Rogan, the 420 thing, from him saying the stock’s overvalued ― is Elon is a really difficult person to read because his mood plays into what he does,” Munster said.

Musk’s broader approach “has always been a middle finger to Wall Street,” he said. “I don’t think there’s some master negotiator thing going on here, I think he just likes keeping investors on their toes.”

Musk put it differently in an April 2019 tweet: “My Twitter is pretty much complete nonsense at this point.”

Separately, Tesla will recall 11,700 vehicles in relation to the latest version of Full Self Driving mode, a National Highway Traffic Safety Administration spokesperson confirmed Tuesday.

Tesla notified the agency of the software flaw after receiving reports of inadvertent activation of the cars’ braking system, an agency spokesperson told The Washington Post on Tuesday. The NHTSA is separately investigating possible flaws in Tesla’s Autopilot system, spurred by a string of crashes involving emergency vehicles.