WASHINGTON, D. C., AP – Tesla Inc has surpassed $US1 trillion ($A1.3 trillion) in market value after landing its biggest-ever order from rental car company Hertz, a deal that has 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 per cent to $US1,045.02 ($A1,394.18) on Monday, 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.

“Strange that moved valuation, as Tesla is very much a production ramp problem, not a demand problem,” Musk tweeted in reply to a comment by Ross Gerber, co-founder of the investment fund Gerber Kawasaki and a Tesla shareholder.

“Wild $T1mes!” Musk wrote in a separate tweet.

Tesla is the first 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 per cent, 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.

Tesla also appeared on Monday to be making progress resolving regulatory problems that threatened its business in China. The company said it had opened a new data and research centre in Shanghai to comply with government requirements that data collected from vehicles in China stay in the country.

However, Tesla faced new US regulatory pressure on Monday. The National Transportation Safety Board’s new chief sent Musk a letter questioning why Tesla was rolling out its “Full Self Driving” software even though the company has not officially responded to the NTSB’s questions about the automated driving system’s safety.

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.

Investors and analysts, for now, are looking past the near-term challenges. Morgan Stanley boosted its Tesla price target by 33 per cent to $US1,200 ($A1,601) as the brokerage expects the electric car maker to surpass eight million deliveries in 2030.