Hertz Interim CEO Mark Fields and Hertz Vice Chairperson Tom Wagner joined Yahoo Finance to discuss the newest phase for the car company.
Joining us now is the new CEO of Hertz, Mark Fields, and Tom Wagner, vice chair of Hertz and co-founder and managing member of Knighthead Capital Management. Good morning to you both. Mark, I'll start with you. Congrats on this deal. So for investors looking over the prospectus on Hertz, who is the Hertz returning to public markets today?
So, that's our strategy going forward. And we think the big trends out there that are driving that around electrification and shared mobility and autonomy really position us well for the future. And our team is very excited about it.
And it's providing a set of services that our customers really want-- better service, touchless service, vehicles that they really want to rent, and overall better experience. We're working very hard throughout the company to try to deliver that across the entire ecosystem that is Hertz. And I think that's something that we're excited about, certainly the employees are very excited about.
And as an investor, the idea of being invested in a company that is very profitable and has a commitment toward sustainability is extremely exciting. This is not something that's on the come. It's something that we are actually delivering on today. And that's important to us. We want to play a critical role, helping to accelerate the adoption of electric vehicles and moving to a cleaner mode of transportation.
JULIE HYMAN: Well, I think that enthusiasm was evident even before the company came out of bankruptcy. The stock was a popular one, as you know, with retail investors during that period. It's Julie here, by the way. Mark, I want to bring you in on the Tesla question, because I know you've been getting a lot of questions about the structure of that auto buy from Tesla. Just clarify for us, what exactly does that deal entail? And what is that going to mean for Hertz?
MARK FIELDS: Well, it's first off, we're very excited about the Tesla relationship. And this is all wrapped around, as I mentioned, our strategy to lead in the adoption of electric vehicles. So we're starting a great relationship with Tesla. We're also ready to partner with many other manufacturers to extend our lead in the adoption of electric vehicles but clearly, we're going to work, I think, very collaboratively with Tesla. Importantly, our consumers really want to drive Teslas. And we want to be there to be able to provide those products for them. So we're very excited about the relationship going forward.
JULIE HYMAN: And so, you know, there's been a lot of talk, I think, about how many cars exactly Hertz is going to be getting from Tesla. You know, I don't know what Tesla's ability is to fill 100,000 car order for you guys or what your timeline is on getting those. I don't know what kind of demand. I mean, you say that your customers are-- you know, they want to drive these cars. Talk to me about the numbers here. What exactly is the order, and what's the timeline?
MARK FIELDS: Well, overall, we ordered 100,000 vehicles. But listen, this is pretty common in the industry where we order vehicles, and then we work very collaboratively with the automakers, and in this case, Tesla, to get those that works for both companies. And we'll do that with Tesla, just like we do with all other OEM partners.
EMILY MCCORMICK: Mark, this is Emily. Thank you so much for being here. I want to stick with that topic. And can you talk a little bit about how Hertz is actually going to be paying for these 100,000 vehicles from Tesla?
MARK FIELDS: Well, first off, obviously, we won't go into details. But, you know, it's very important that whenever we go into any kind of strategic relationships, both partners have to have benefits out of that. And I think in this case, that's absolutely the case.
BRIAN SOZZI: Mark, on the electrification topic, you are a leader at Ford, when you were the CEO at Ford, and bringing-- and setting the groundwork for some of these things happening now at the company. Who do you think is the leader in the EV race now? Because I think this will mean a lot of things to your business. Is it GM or Ford?
MARK FIELDS: Well, the encouraging thing is we're seeing the entire industry embrace electrification. And we're in this once in a lifetime shift of propulsion system, which is really important because as Tom said, at Hertz, we want to be known not only as a mobility company, but just as importantly, a sustainability mobility company. And listen, our approach is, we're going to work and we want to partner with all of the major automakers to help them in their objectives of rolling out electrification. And, you know, I think we'll-- just as we've supported them in the past, we want to support them going forward. And we're looking forward to doing that.
BRIAN SOZZI: Tom, how much capital do you envision Hertz will have to shell out over the next few years to bring this EV vision to life? I know you guys are also moving very aggressively in building out the EV infrastructure.
TOM WAGNER: Well, it's going to be a substantial investment to get there. The way that we finance the vehicles provides us with an incredible amount of flexibility. We could transform the fleet from a capital perspective very, very quickly. But the key here is making sure that the customer experience is right. And that means installing the charging infrastructure and making sure that we have the right telematics and user experience or interface in place before we complete that rollout.
And the reason for that is we want the customer experience in renting an EV from Hertz to be every bit as good as the customer experience that they enjoy and owning or leasing those vehicles. So we're very focused on this. And it's an incredibly important part of the effort at Hertz to bring electric vehicles to the consumers who we see is really, really wanting to rent them.
BRIAN SOZZI: Mark, I've been saying this a lot, just following Hertz and this Tesla relationship. Who in the world services 100,000 Tesla cars?
MARK FIELDS: Well, I'd point out that, you know, clearly today, we have here in the US, for example, a fleet of almost 400,000 vehicles. And so we have the infrastructure, obviously, to maintain those vehicles. And we'll do that with our Tesla relationship, just like we do with all the automakers. But, you know, we clearly have the capacity. And I'd also point out that when it comes to that and also Tom's point about the charging infrastructure, listen, we're 90% of the population is within 10 miles of a Hertz location. And we think that's going to serve our customers very well going forward, particularly as we transition to electric vehicles.
BRIAN SOZZI: I think it's fair to say, Mark, the investor base for a Hertz, it looks a little different, perhaps, than what you remember over at Ford. What's it like leading a company like Hertz that is so well known in consumer land, but also that it has become very popular with retail investors?
MARK FIELDS: Well, there's a lot of parallels. First off, you know, Hertz is a 100 plus year old company with an iconic brand. And those are incredible assets and precious assets to have. And, you know, we're going to take those assets and use it to amplify externally, but also internally. And listen, we're very focused as a management team on just running an excellent business, both for today and tomorrow. And we'll let the market decide, but we're very focused on delivering results and delivering for our customers. And we think that'll pay off in the market.
JULIE HYMAN: Tom, it's Julie again. Since we have you here, I know you already talked about Hertz, but I do want to ask you one question about the broader credit market and distressed market in particular, especially as we are expecting to get higher rates, the Fed tapering over the next six months or so, and then presumably higher rates after that. What's going to be the effect on the distressed market here? We haven't had higher rates in a while now.
TOM WAGNER: Wait a minute, what distressed market? You know, listen, in a world of persistently low interest rates and a lot of capital formation, any company can get financing, any company can build capital. And so until that changes, we're not likely to see any real or material disruption in the credit markets. I think it'll be pockets of dislocation on a sector by sector and company by company basis, but nothing that would represent the wholesale dislocation, unless we see something impact the markets from outside the capital markets.
You know, a global pandemic certainly immediately comes to mind. But I think as it relates to any disruption in the markets from the modest moves that the Fed is talking about making in the near and intermediate term, you know, hard to imagine those things having a dramatic impact on the credit markets as we sit here today.
BRIAN SOZZI: Mark, yesterday, the administration lifted the travel ban for international visitors. Have you seen an uptick in bookings?
MARK FIELDS: Yeah, when we look at the leading indicators, clearly with the opening of these 33 countries, including majority of Europe, China, Brazil, et cetera, we call that inbound business. That's starting to pick up. It's very good business for us, and we're ready to serve those customers as they start coming back. But yes, it's starting to pick up, and we think it's going to continue to build, particularly as we get through the holidays and into next year.
BRIAN SOZZI: Welcome back to earnings calls each quarter. Mark Fields, new CEO of Hertz, good to see you again, and Tom Wagner, vice chair of Hertz and co-founder and managing member of Knighthead Capital Management. Good luck to you both. We'll talk to you soon.
