A Tesla on the assembly line at the company’s factory in Fremont in the San Francisco Bay Area. Courtesy Tesla

Tesla surpassed $1 trillion in stock market value on Monday 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.

Tesla is the first carmaker to join the elite club of trillion-dollar companies that includes Apple, Amazon, Microsoft and Alphabet, the parent company of Google.

Apple, Alphabet and Tesla were all founded in Silicon Valley, though the automaker recently announced it will move its headquarters to Austin while expanding other operations in the Bay Area.

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. That would be more than twice the volume of current sales leaders Volkswagen AG and Toyota Motor Corp.

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 Monday.

“It (the Hertz order) puts an exclamation point under guidance for 50%+ growth in deliveries,” Roth Capital analyst Craig Irwin said. “Another solid piece of evidence EVs are going mainstream.”

Tesla now faces the daunting day-to-day challenge of becoming a high-volume automaker growing at a rate not seen since the early 1900s when demand exploded for Henry Ford’s Model T.

Tesla is coping with an order backlog for its vehicles and extended supply chain disruptions. Tesla Chief Financial Officer Zachary Kirkhorn cautioned investors during a call last week that Tesla’s near-term production goals will hinge on resolving those disruptions and ramping up two new, huge assembly and battery plants in Austin and Berlin.

“There is quite an execution journey ahead of us,” Kirkhorn said.

Rivals are not sitting still. Mercedes-Benz, General Motors, Ford, and startups such as Lucid and China’s Xpeng are all battling Tesla with new electric cars or trucks.

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.

The Hertz deal also underscored the power of the Tesla brand, as the rental car company emerges from bankruptcy and aims to revive its once-dominant brand. Hertz’s rescue is led by a group of investors including Knighthead Capital Management, Certares Opportunities and Apollo Capital Management.

“We absolutely believe that this is going to be competitive advantage for us,” Hertz’ Fields said of the Tesla order, due to be delivered by the end of 2022.

“We want to be a leader in mobility … Getting customers experience with electrified vehicles is an absolute priority for us.”

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.

Fields declined to say how much Hertz was paying for the order.

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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