Can't Tesla fund their own loans? (high interest, demand impact, etc)

[fritter63]

Was thinking (I know that's dangerous).

If the higher interest rates are going to affect demand, doesn't Tesla have plenty of cash on hand to just finance loans at a lower rate? Rather than pairing with a bank (which is what they do now I think?).

Are they regulated into having to stick to the usual prime + whatever math as regular banks?

Or would doing so affect the books on earned vs accrued or whatever the terms are?

 

[CyberGus]

Tesla has broad leeway to finance their own sales. However, this would make them a "financial institution" subject to a litany of regulations, licensing, and reporting.

I believe the Big Three all have their own financing, but in completely separate divisions.

 

[Deleted member 12457]

Tesla could easily fund car purchases with no interest if monthly payments are paid on time. Look at the Apple Card when used to buy Apple products. No interest for the length of the "loan" as long as you make the standard monthly payment. I'm all for putting corrupt banks out of business, charging extremely high interest rates. Tesla could keep the sales price where it is, provide zero interest financing, and still make money. Other car manufacturers have had zero interest loans but once you add all the dealership costs, you're still stuck with a high payment.

 

[JBee]

Robotaxi will be charged by the minute. No credit checks, up front costs, downpayments. And you don't have to pay for it whist it stands around for nothing in your garage...plus you don't need to pay for a garage either, or parking.

 

[fritter63]

Robotaxi will be charged by the minute. No credit checks, up front costs, downpayments. And you don't have to pay for it whist it stands around for nothing in your garage...plus you don't need to pay for a garage either, or parking.

I for one welcome our new robotaxi rental model overlords (especially in conjunction with my eBike used more in good weather).

but until then….

 

[charliemagpie]

We are talking Paypal Man.

X.Com will deliver the financial division to Musk, I predict it will provide low-cost finance not just for our cars, but for anything.

---

But on the car front, I was thinking the other day... why sell cars at all ?

Perhaps there is Niche, some people must own their car... so ok, we sell some cars.
Robotaxi will recoup the cost of the car within a year, it just makes sense to focus on saturating the world with Tesla Taxi's.

 

[Ogre]

That’s a lot of capital to tie up when they could instead use it to build a Gigafactory.

 

[Crissa]

That’s a lot of capital to tie up when they could instead use it to build a Gigafactory.

True, but they're maxed out on Gigafactory construction expertise right now, apparently.

-Crissa

 

[fritter63]

True, but they're maxed out on Gigafactory construction expertise right now, apparently.

-Crissa

They need to buy ICON and figure out how to 3D print them….?

 

[Ogre]

If Tesla can afford to fund loans, I’d just as soon they let the banks fund the billions in car loans and Tesla buy back shares of their stock at this price. I’m not even a huge buyback advocate, but when you are talking about best use of capital for shareholders, I just don’t see turning themselves into a lender being one.

It’s healthy for a company Tesla’s size to have a strong cash position, particularly in uncertain times. Apple used that cash pool to woo suppliers and essentially monopolize critical components. Tesla can do the same… heck I think they are doing it already.

Another thought, they can build a mega factory in Europe so they don’t have to ship thousands of tons of batteries to Europe to deploy.

 

[Crissa]

I would prefer they keep up the demand curve with financing rather than buybacks, but that's just me.

Everyone will have different priority listings ^-^

-Crissa

 

[Ogre]

As I said, I’m not a big buyback advocate so it’s easy to walk me back from that stance. I just don’t see Tesla becoming their own bank helping them with their mission or selling more cars.

 

[charliemagpie]

If Tesla can afford to fund loans, I’d just as soon they let the banks fund the billions in car loans and Tesla buy back shares of their stock at this price. I’m not even a huge buyback advocate, but when you are talking about best use of capital for shareholders, I just don’t see turning themselves into a lender being one.

It’s healthy for a company Tesla’s size to have a strong cash position, particularly in uncertain times. Apple used that cash pool to woo suppliers and essentially monopolize critical components. Tesla can do the same… heck I think they are doing it already.

Another thought, they can build a mega factory in Europe so they don’t have to ship thousands of tons of batteries to Europe to deploy.

I reckon the flood gates are set to open. We built a factory in 12 months.

I think it terms of 1.5TW by 2030. Huuuge push is coming.

 

[Ogre]

I reckon the flood gates are set to open. We built a factory in 12 months.

I think it terms of 1.5TW by 2030. Huuuge push is coming.

Tesla Energy… it is going to open some eyes this quarter. Over the past 5 years Tesla has deployed about about 2.5 GWh of energy storage. This quarter, Lathrop is on track to deliver almost double that and it’s likely to double again over the next 18 months.

These are massive, they broke ground last September and have ramped to 4 GWh/ quarter and are ramping up to 40 GWh/ year. Hugely profitable, huge benefits to society and there is massive demand for them.

If Tesla could just deploy capital making these factories it would be huge. Their big problem is sourcing materials and quality staff to bring these factories online.

 

[Quicksilver]

The legacy automakers are awash in red ink and part of that is because more people are having to let cars go back because inflation has eaten away their ability to pay recurring bills.
According to several finance gurus I follow this is only going to get worse in 2023 and probably 2024.
Higher interest rates are going to affect the auto industry just like it is affecting the housing market.
One reason is because lenders are loaning money to people who are financial risks to begin with.
The same thing happened when the housing market collapsed a few years ago.
Tesla would be crazy to get into the car financing racket.