Tesla’s Elon Musk downplays deal to supply cars to Hertz

Tesla shares sunk in early trading on Tuesday after founder Elon Musk cast doubt on a deal to supply Hertz with rental cars.

The Hertz announcement last week of an agreement for Tesla to supply the car rental firm with 100,000 of its electric autos helped push Musk’s company to a $1 trillion market valuation alongside tech titans like Amazon, Microsoft, Google and Apple.

But Musk on Monday said no agreement had been finalized.

“If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet,” Musk tweeted in response to a chart showing Tesla’s share price ascending.

“Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers. Hertz deal has zero effect on our economics.”

Tesla shares were trading 2.3 percent lower just after the open on Wall Street.

Separately, the US National highway Traffic Safety Administration on Tuesday announced the recall of nearly 12,000 Tesla cars due to errors with their communication software.