Just over a week ago, Hertz stunned the automotive world by announcing it had placed an unprecedented order for 100,000 electric vehicles from Tesla, to be delivered over the next 14 months. The news sent both companies’ share prices soaring by over 10%, and ultimately helped push Tesla’s overall value above $1 trillion.
But gravity kicked in Tuesday, after Tesla CEO Elon Musk said (on Twitter, naturally) that “no contract has been signed yet.” Musk also stressed that the Hertz deal “has zero effect on our economics,” owing to demand for Teslas already hugely outstripping production. “We will only sell cars to Hertz for the same margin as to consumers,” he wrote.
That latter fact could even be seen as a positive, given that fleet purchases tend to include big discounts. Nonetheless, Tesla’s stock fell by over 4% in premarket trading, and Hertz’s was down around 7%.
However, in an emailed statement, Hertz doubled down on last week’s announcement.
“As we announced last week, Hertz has made an initial order of 100,000 Tesla electric vehicles and is investing in new EV charging infrastructure across the company’s global operations,” the company said Tuesday. “Deliveries of the Teslas already have started. We are seeing very strong early demand for Teslas in our rental fleet, which reflects market demand for Tesla vehicles.”
The rental giant emerged from Chapter 11 bankruptcy in June, with restructuring and fresh equity capital having slashed its debt levels by 80%. Its entry into Chapter 11 last year saw Hertz become a so-called meme stock, with retail investors betting on a stronger reemergence.
The drop in Tesla’s share price is unlikely to be related purely to Musk’s Hertz tweet. It also comes just after Tesla had to issue a recall for nearly 3,000 Model Y and Model 3 vehicles, owing to a suspension issue. And, as some have theorized, Tesla’s 18% ascent over the past five days may have simply prompted investors to take profits—some of Tesla’s current and former board members reportedly cashed in last Wednesday.
More must-read business news and analysis from Fortune:
- The Impact 20
- Hong Kong’s COVID policies are forcing big banks to consider shifting resources away from the city
- Hyperinflation: Why Jack Dorsey is worried
- Lucid Motor’s Air EV finally hits the roads with a range that blows Tesla away
- Chewy CEO Sumit Singh on the pet boom, the pandemic, and moving from puppyhood to profitability
Subscribe to Fortune Daily to get essential business stories delivered straight to your inbox each morning.
