For Hertz, the order marks the first big push to electrify its fleet since the rental-car company in June emerged from bankruptcy proceedings.
"While Hertz is in the early stages of electrifying its rental car fleet, Tesla getting an order of this magnitude highlights the broader EV adoption underway ... as part of this oncoming green tidal wave now hitting the US," Wedbush analyst Dan Ives said in a note to investors.
Shares of Hertz at last check rose 7.3% to $26.50 and Tesla traded 4.1% higher at $946.92.
Tesla’s cheapest Model 3 sedan starts at about $44,000, making this the largest order for the electric-car maker, Reuters reported.
The vehicles will be delivered through the end of 2022. Starting early in November, customers will be able to rent a Tesla Model 3 sedan at Hertz locations in the U.S. and select cities in Europe, the company said in a statement.
Hertz, Estero, Fla., said it was installing thousands of chargers in its location network. Customers who rent a Tesla Model 3 also will have access to 3,000 Tesla supercharging stations throughout the U.S. and Europe.
"Electric vehicles are now mainstream, and we've only just begun to see rising global demand and interest," said Hertz Interim Chief Executive Mark Fields in a statement.
Hertz plans to offer customers a digitized guide to EVs and an expedited EV-rental process through the company's mobile app.
"The new Hertz is going to lead the way as a mobility company, starting with the largest EV rental fleet in North America and a commitment to grow our EV fleet and provide the best rental and recharging experience for leisure and business customers around the world," Fields added.
Hertz has also hired Tom Brady, the seven-time Super Bowl-winning quarterback, to star in ads showcasing the new Teslas.
Hertz had filed for bankruptcy protection last year as travel demand sank during the worst of the pandemic.
The company was taken over by a group of investors including Knighthead Capital Management, Certares Opportunities and Apollo Capital Management.