Tesla Inc surpassed $1 trillion in market value this week after landing its biggest ever order from rental car company Hertz, a deal that reinforced the electric car leader's ambitions to top the entire auto industry in sales over the next decade.
Tesla shares surged as much as 14.9% to $1,045.02, making it the world's most valuable automaker according to Reuters calculations based on its latest filing.
Even Tesla Chief Executive Elon Musk expressed surprise at the velocity of the surge. Tesla is the first carmaker to join the elite club of trillion-dollar companies that includes Apple Inc, Amazon.com Inc, Microsoft Corp and Alphabet Inc.
Most automakers do not boast about sales to rental car companies, often made at discounts to unload slow-selling models. But for Tesla and its investors, Hertz's decision to order 100,000 Tesla vehicles by the end of 2022 showed electric vehicles are no longer a niche product, but will dominate the mass car market in the near future.
"Electric vehicles are now mainstream, and we've only just begun to see rising global demand and interest," Hertz interim Chief Executive Officer Mark Fields told Reuters.
Tesla Chief Executive Elon Musk has set an annual sales growth target of 50%, on average, eventually reaching 20 million vehicles a year.
Consumer demand for electric vehicles is turning a corner in some major markets. The Tesla Model 3 was the best-selling vehicle of any kind in Europe last month, consulting firm JATO Dynamics reported.
Investors and analysts, for now, are looking past the near-term challenges. Morgan Stanley boosted its Tesla price target by 33% to $1,200 as the brokerage expects the electric carmaker to surpass 8 million deliveries in 2030.
Tesla's cheapest Model 3 sedan starts at about $44,000, making this order worth about $4.4 billion, if the entire order were for its mass-market sedan.
With the current order, Hertz said EVs will make up more than 20% of its global fleet. Fields cited the rising number of EVs for sale and consumer interest in electrified vehicles.
Hertz also said it was installing thousands of chargers throughout its network. Customers who rent a Tesla Model 3 will have access to 3,000 Tesla supercharging stations throughout the United States and Europe.
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