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

[Richard V.]

Their big problem is sourcing materials and quality staff to bring these factories online.

Tesla energy is doing great (e.g., 4680 production). I believe the materials challenge is being addressed as part of their unofficial master plan 3 (e.g., the batteries) as Elon do point it out.
However, I am not aware Elon stated anything concerning the "staff quality". Perhaps Elon is addressing the staff quality challenge by adding more Giga factory locations, where each location could be producing 2 million vehicles using the best the local market can offer in terms of staff. From what I know Tesla has been a magnet to recruiting talent. Even the Giga Texas factory will have quality staff because they are "importing" them and building a Tesla community out of no where. Do you think that building so many Giga factory is a way to manage "staff quality" issues? I am assuming it could be, but we have not seen the plan 3 yet.

 

[charliemagpie]

I think we have enough batteries to begin a fast rollout towards 3TW.

And we have a new production facility up and running, easy now to train people for the next one. They could be training already.

 

[Cybertruckee]

Tesla need to create another bureaucracy within it's organization to be able to do financing for costumer purchases.

It is better to stick to knitting and what it knows best - EV tech and building cars.

Also, to transfer the risk while they sit cozy having been paid for the unit that the costumer already purchased and have someone else do the worrying and collecting the monthly amortizations.

 

[Luke42]

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.

There was a time some years ago when Ford Credit was the only profitable part of the company.

Captive financing arms are definitely a part of the auto business. It's not something you want to do as a lean startup, but it's certainly part of a fully mature auto industry Juggernaut.

 

[Ogre]

Tesla energy is doing great (e.g., 4680 production). I believe the materials challenge is being addressed as part of their unofficial master plan 3 (e.g., the batteries) as Elon do point it out.
However, I am not aware Elon stated anything concerning the "staff quality".

Musk does not complain about staff quality, just the reverse. But he does often say things like “If you have XZY talent, we are hiring”.

My comment was largely an assumption. Tesla has $22 billion in the bank, why aren’t they building 4 more gigafactories? It’s clearly not a money issue so that leaves talent and other resources. My assumption: the people he needs to build the next factory are busy finishing these ones.

 

[firsttruck]

Musk does not complain about staff quality, just the reverse. But he does often say things like “If you have XZY talent, we are hiring”.

My comment was largely an assumption. Tesla has $22 billion in the bank, why aren’t they building 4 more gigafactories? It’s clearly not a money issue so that leaves talent and other resources. My assumption: the people he needs to build the next factory are busy finishing these ones.

Another factor is getting the fabrication equipment from suppliers. IDRA and other equipment suppliers can not overnight double or triple production of factory machinery that individually takes months to make.

 

[Ogre]

Another factor is getting the fabrication equipment from suppliers. IDRA and other equipment suppliers can not overnight double or triple production of factory machinery that individually takes months to make.

Certainly. Particularly when the product in question has never been produced like the 9k Ton Gigapress.

Which likely brings another concern up. Tesla likes to learn and evolve based on past performance. It’s hard to do that if you jump ahead of yourself. Finish GT and GB, and build the next 2-3 factories based on that learning. Though to maintain their pace of expansion, they won’t be able to wait 2 years before starting after these 2 complete.

 

[Crissa]

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.

Who they lend to doesn't have to be bad risks. Why would they do that?

The reason to get into financing is because the interest rates are dumb for the product, not to lend to bad risks.

-Crissa

 

[Bill906]

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.

Tesla did become an insurance company to help sell their cars. I don't think becoming a lender is that much different. However, I don't think Tesla will become a lender because I don't think Inflation and high interest rates will be a long term thing. It's a huge solution for a problem that will eventually go away on its own. Hopefully sooner than later. ?

 

[Ogre]

Tesla did become an insurance company to help sell their cars. I don't think becoming a lender is that much different. However, I don't think Tesla will become a lender because I don't think Inflation and high interest rates will be a long term thing. It's a huge solution for a problem that will eventually go away on its own. Hopefully sooner than later. ?

This is a really good point. Pretty sure the initial impetus was because insurance companies were shafting owners. Then when they got into it they realized they had more information than the insurance companies did and could use that to reduce costs and profits even more.

 

[Cybertruckee]

This is a really good point. Pretty sure the initial impetus was because insurance companies were shafting owners. Then when they got into it they realized they had more information than the insurance companies did and could use that to reduce costs and profits even more.

Tesla is only acting as an agent in insuring it's cars.

The real insurers is Redpoint County Mutual Insurance Company and Midvale Indemnity Company.

They just get the commission and all risk and work are done by the underwriter.

 

[Ogre]

Tesla is only acting as an agent in insuring it's cars.

The real insurers is Redpoint County Mutual Insurance Company and Midvale Indemnity Company.

They just get the commission and all risk and work are done by the underwriter.

California and a few other states are under the old setup where they are just reselling insurance, but they started underwriting their own insurance back in March. Most states operate under this new structure.

California is likely to remain under the old scheme because they can’t use the FSD computer to calculate rates in California due to regulation.

 

[cybrtrk_maybe]

We are talking Paypal Man.

...

I would rather pay a bank or credit union additional interest, than give PayPal any of my business; They screwed us out of over $5,000 on a business deal where we had a contract and documentation to support it, but they didn't care and just refunded all of the funds to the buyer, plus costs we encountered retrieving our asset. I'll never use them again and spread the word to others not to use them!

 

[Crissa]

California is likely to remain under the old scheme because they can’t use the FSD computer to calculate rates in California due to regulation.

Yeah, we have anti-stalking laws. They can take samples, but not real-time data.

-Crissa

 

[Ogre]

Yeah, we have anti-stalking laws. They can take samples, but not realtime data.

-Crissa

Yeah, it’s a neat idea until it actually costs you cash.

Filed under “Why we can’t have nice things” thank you very much Verizon and Comcast.