Hertz Claims Contract Signed and Vehicle Delivery Started
WSJ Reports "Issue Affecting Stock Price... SEC Investigation Needed"
Musk Previously Experienced SEC Investigation Over Negative Stock Price Remarks
[Asia Economy New York=Correspondent Baek Jong-min] Even after purchasing 100,000 vehicles in bulk, no discount is given. The usual practice of receiving discounts for bulk purchases does not apply to the American electric vehicle company Tesla. Elon Musk, Tesla's CEO, and rental car company Hertz have expressed differing views on the purchase of 100,000 vehicles, raising the possibility that Musk may once again face an investigation by the U.S. Securities and Exchange Commission (SEC).
On the 1st (local time), Musk tweeted that Hertz's announcement of purchasing 100,000 Tesla vehicles was "not yet contracted."
Musk stated, "With demand far exceeding production, we will sell cars to Hertz at the same margin as to regular customers," adding, "The contract with Hertz has no impact on our management."
In response to the ripple effect of Musk's remarks, a Hertz spokesperson said, "We have ordered 100,000 Tesla electric vehicles and are investing in electric vehicle charging infrastructure across our global sales network," and "Delivery of the initial Tesla electric vehicles has already begun." The spokesperson further mentioned, "There is a surge in demand for Tesla vehicle rentals, which shows strong market demand for Tesla vehicles." Hertz has announced that Tesla vehicle rentals will begin in early November.
According to U.S. media, Tesla, which relies solely on Musk's tweets and lacks a promotional organization, has not officially commented on the controversy.
Musk's remarks are interpreted as indicating a conflict between Tesla and Hertz over the extent of vehicle price discounts. The Wall Street Journal (WSJ) also noted discrepancies between Hertz's announcement and Musk's statements, arguing that regulatory authorities should intervene.
WSJ reported that Musk's remarks could also be subject to SEC investigation. Charles Elson, a finance professor at the University of Delaware, pointed out, "If Hertz says there is a deal and Musk denies it, the SEC needs to look into this issue. It could affect the stock prices of both companies."
WSJ, citing sources, reported that Hertz attempted negotiations for several months to purchase Tesla vehicles, but Tesla did not offer any discounts. Sources said Hertz plans to purchase Tesla vehicles using funds raised through bond issuance via a special purpose vehicle rather than its own capital.
Recently, Tesla's stock price exceeded $1,200, exciting shareholders, but Musk previously drew significant shareholder dissatisfaction by mentioning the possibility of Tesla delisting in 2018, which caused the stock price to fall. He was investigated by the SEC because of this.
Musk and Tesla agreed with the SEC that Musk would step down as chairman of the board and have company lawyers review his tweets, paying a $20 million fine. Since then, Musk has continued to criticize the SEC. WSJ reported in June that the SEC warned Musk about his reckless tweets.
On this day, Tesla's stock price traded at $1,180, down 2.34% from the previous day. Tesla's stock price had surpassed $1,200 the day before, but Musk's remarks had a negative impact, keeping the stock weak. Hertz's stock showed weakness in over-the-counter trading but later stabilized.
On the same day, Hertz's competitor Avis saw its stock price surge by 106% due to improved performance from rising vehicle rental prices.
On the 25th of last month, Hertz announced it would purchase 100,000 Tesla Model 3 vehicles by the end of next year. Following this announcement, Tesla's stock price surpassed $1,000, raising expectations for large-scale demand.
Neither Hertz nor Tesla has disclosed the exact scale of the deal. U.S. media reported that considering the Model 3 vehicle price is around $40,000, the total transaction would be about $4 billion, but large rental car companies typically receive substantial discounts.
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