For automakers treated fleet sales like newspapers that were free and kept in hotel entryways. You moved an item, sure, however not in a manner any half-sentient financial backer would value. Elon Musk seems to have changed everything.
Rental car giants like Hertz Global Holdings Inc. and Avis Budget Group Inc. witnessed a surge in their share in the past week after news of them buying or plans of buying several electric vehicles featured on the news. Hertz then said that it would purchase about 100,000 Muskmobiles and that is when Tesla’s valuation rose to $1 trillion. Musk was quick to clarify through a tweet that they had not signed any contract with Hertz. This led to a retreat in Tesla’s stock. However, the tech giant’s market cap stayed much higher, about $260 billion more than when the news broke.
An Innovative Business Model
Fleet sales have now become a self-funded business model. All a car rental corporation has to do is announce that they will or may purchase EVs by the thousands. What was once considered as “cost” is now just a one-way road to meme-hood. After this is done, the car rental corporation then has to win the trust of their investors and sell them more stock. Once this funding has been secured, the corporation can then actually purchase those new EVs. It may seem funny but this model actually works with stocks of companies reaching much higher than their original valuation.
Tesla Leads the Way
Tesla spearheaded the way when its share prices reach a record high in 2020. It quickly raised extra money from its equity sales. Now, Musk’s company can easily fund itself, at least for a little while. The one sector that should take note of this is the oil industry, which has only been promising about paying money but never raising any. This new yet frightening trend does not only allow Tesla to make their currency but can also franchise the concept to their customers.