Musk says Hertz deal hasn't been signed yet after Tesla valued at more than US$1 trillion – UPDATE

UPDATE, November 3: A week after Tesla’s market capitalisation topped US$1 trillion (AU$1.37tn) on the back of a large order from Hertz, CEO Elon Musk has confirmed there is no contract in place with the rental car agency at this time.

"If any of this is based on Hertz, I'd like to emphasize [sic] that no contract has been signed yet,” Musk wrote on Twitter.

"Hertz deal has zero effect on our economics."

Despite his statement, Tesla shares fell 4 per cent in early Tuesday trading, according to Reuters.

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In the original announcement from Hertz, the company said Tesla models would be available to be rented from its US locations from early November – suggesting deliveries had already begun.

This week, Tesla also issued a recall for 12,000 of its vehicles sold in the US since 2017, announcing a software error could cause the vehicle to unexpectedly engage its emergency brakes – even when the vehicle is in no immediate danger, but increasing the risk of a rear-end collision.

The electric carmaker came under increased scrutiny from the US National Highway Traffic Safety Administration (NHTSA) for uninstalling faulty software without issuing a safety recall, as is required under law.

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The story to here

October 26: Overnight trading has seen Tesla become the sixth trillion-dollar company in history, with the stock market valuing the carmarker at US$1.027 trillion – or approximately AU$1.37 trillion.

The move grows CEO Elon Musk’s personal wealth to US$252 billion (AU$336.5bn), making him 30 per cent richer than the world’s second-placed person, Jeff Bezos, who enjoys an estimated wealth of US$193bn (AU$258bn) according to the Bloomberg Billionaires Index.

Despite Tesla not even making the top 10 of the world’s highest-selling cars – with just shy of 500,000 deliveries in 2020 – the company is valued at more than the nine largest carmakers combined.

By comparison, Toyota was the global top-seller last year with 9.3 million sales, and is currently valued at US$240bn (AU$320.5bn) by market capitalisation.

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Tesla stock surged by 14.9 per cent following the announcement that rental car company Hertz would be ordering 100,000 of its vehicles by the end of 2022, causing the US carmaker’s shares to close up 12.7 per cent at US$1024.86 on Monday night US time.

"Strange that moved valuation, as Tesla is very much a production ramp problem, not a demand problem," Musk tweeted in reply to a shareholder.

While Musk does not take a salary from the company, his compensation package is linked to sales results. Last week, Tesla reported adjusted earnings (before interest, taxes, depreciation, and amortization) of US$3.2 billion (AU$4.27bn) – up 77 per cent on the previous year and enough to trigger the release of an US$8 billion (AU$10.7bn) options package to Musk under his 2018 contract, according to Reuters.