With Avis, Tesla cars now buy themselves

by Liam Denning

For automakers, fleet sales used to be like the free newspapers found in hotel lobbies. While the product was changing, it was not in a way that any moderately conscientious investor would value.

As with so many other things, Elon Musk has apparently changed that.

The shares of the car rental giants Hertz Global Holdings Inc. and, especially, Avis Budget Group Inc. skyrocketed last week on news that they are buying a lot of electric vehicles or planning to do so. Only for that.

Tesla Inc. also beat a $ 1 trillion valuation after Hertz said it would buy 100,000 Muskmobiles. And even after Musk threw some cold water on Twitter by pointing out that no contract had been signed with Hertz, which caused the actions of Tesla They fell back, their market capitalization was even higher than when the original news broke, at roughly $ 260 billion, or, as I like to exemplify it, roughly the value of Exxon.

So far from being an embarrassment, fleet sales are now a fantastic self-financing business model in their own right. Rent-a-Car Corp. it simply announces that it will buy or could buy thousands of electric vehicles. Previously it was considered a “cost”, Is now actually a ticket to the world of memes.

Once it has been reflected in the share price, all that remains is for Rent-a-Car to take investors at their word and give them more of what they want: new shares. Therefore, with the funds secured, Rent-a-Car you can afford to buy all those shiny new electric vehicles. Believe it or not, but you will probably buy some.

The permanent variation look is a bit laughable, sure. But all these actions have, in reality, a much higher value than before these announcements and half intentions were known, so you have to deal with that reality.

Tesla led the way, of course. When its shares soared in 2020, it quickly raised more money from stock sales than from all of its previous issues up to that point. The result is that the company Musk you have more than enough cash to finance yourself for a while. Yeah, valuation was crazy before the whole fleet thing, and now it’s crazy even more.

Oil companies, now spending their time promising to shell out money rather than daring to raise it, should pay special attention.

There is a long history of bubbles that have redefined industries, from railroads to technology and … shale. The scary new twist for energy operators is that Tesla can’t just mint its own coin. Apparently, you can now franchise that talent to your clients.