A Tesla Model 3 car
STR/AFP via Getty ImagesRental car company Hertz Global will supply up to 50,000 Tesla cars to Uber drivers. Drivers for the ride-hailing company will be using the rented electric vehicles in the U.S. as soon as next week.
Uber Technologies (ticker: UBER) drivers will be offering services with rented Tesla (TSLA) cars from Nov. 1, initially in Los Angeles, San Francisco, San Diego, and Washington, before a nationwide rollout, Uber said Wednesday.
Hertz (HTZZ) said Monday that it would order 100,000 Tesla vehicles by the end of 2022 and that the electric vehicles would make up more than 20% of its global fleet. That deal—Tesla’s largest with a rental company—sent shares in both Hertz and Tesla surging, helping the electric-vehicle stock top $1 trillion in market capitalization for the first time. Hertz emerged from bankruptcy at the end of June.
It’s unclear whether Hertz’s 50,000-vehicle deal with Uber involves half of the fleet it has ordered from Tesla. Hertz didn’t immediately respond to a request for comment from Barron’s.
Tesla rentals for Uber drivers will start at $334 a week before dropping to $299 as the program gets underway, including insurance and maintenance, which Uber said was the best Tesla rental deal available on the market.
Drivers eligible for the initial launch period must have completed at least 150 trips and have at least a 4.7-star rating.
“This is the largest expansion of electric vehicles on a mobility platform in North America and one of the largest globally, marking another step towards Uber’s zero-emissions goal,” said Andrew Macdonald, Uber’s senior vice president of mobility and business operations.
“This will expose more consumers to the EV experience than ever, as riders who use Uber start seeing Teslas more frequently throughout the holidays.”
Uber stock was 1.7% higher in premarket trading Wednesday, while Tesla shares gained 2.2%. Hertz stock trades in over-the-counter markets and closed 1% higher Tuesday.
Analysts led by Dan Ives—a Tesla bull—at broker and investment bank Wedbush said the deal between Uber and Hertz paves the way for more growth in taxis, and in particular self-driving ”robotaxis,” for Tesla. Elon Musk’s electric-vehicle company is developing autonomous driving, or full self-driving (FSD) software.
“Taking a step back, we believe this starts to lay the groundwork for the long awaited robotaxi network over the next decade from Tesla with the Uber/Hertz partnership planting the seeds for where this is all directionally heading in our opinion,” Ives said.
“Now, its all about FSD and making sure this technology is ready for safe deployment over the coming years with robotaxis a likely reality for Tesla in the next 2-3 years,” the analyst added in a note.
The team at Wedbush also said the deal “massively” expands the total addressable market for Tesla and other electric-vehicle makers, with more consumers experiencing EVs when renting a car or taking a rideshare.
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