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

[EmmaMcgee]

Tesla definitely has a lot of cash on hand, and it seems like they're always pushing the boundaries with new technologies and strategies. However, certain regulations or accounting considerations might prevent them from offering lower interest rates on their own. It's worth consulting with different financial advisors or even reaching out to Mortgage Broker Cambridge to get a clearer picture. As for staff quality, I think Tesla is aware of the importance of a strong team and is always working to attract and retain top talent. Building more Giga factories could be part of that strategy, but only time will tell.

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[jerhenderson]

without evidence of your claim, it's just gossip.

 

[Crissa]

without evidence of your claim, it's just gossip.

I know multiple artists who lost business accounts with PayPal after being hit by their arbitrary rules. It only takes one customer asking for something you don't sell and they'll shut you down and take all the money in the account.

-Crissa

 

[cheysel]

Tesla does have a good amount of cash, but they might prefer to use it for other investments or R&D. Plus, partnering with a bank can spread the risk. Regarding interest rates, Tesla isn't necessarily bound by the same lending regulations as traditional banks. They might be able to offer more competitive interest rates directly to consumers. Ultimately, Tesla's financial experts will make these choices based on what is in the best interests of the company. Speaking of personal financial choices, I'd like to mention that I've found it helpful to turn to experts in Equity Release Liverpool. They've always helped me make well-informed financing decisions and select the best loan options.

 

[cvalue13]

Tesla does have a good amount of cash, but they might prefer to use it for other investments or R&D. Plus, partnering with a bank can spread the risk. Regarding interest rates, Tesla isn't necessarily bound by the same lending regulations as traditional banks. They might be able to offer more competitive interest rates directly to consumers. Ultimately, Tesla's financial experts will make these choices based on what is in the best interests of the company.

Musk answered this question at investor day this year.

Auto manufacturers can’t play bank without becoming a bank. That’s the point of of regulations work: they don’t care if you call yourself a ‘bank,’ they care if you behave like one.

Existing OEM financing companies exist, but are standardly ‘financiers of last resort’ meaning they stretch lower than most banks are willing, or less commonly instead take the cream of crop borrowers when attached to promotional APRs.



For Tesla, there exists a basic cost of capital. To lend on cars, at reduced interest rates, runs up against Tesla’s cost of capital. Which means for every $1 they might loan at reduced rates, they’d be left coming up with a $1 at market rates for other projects such as infra build-out, etc.

But for the same reasons, these ‘in house’ financing companies make sense when times are good, and become lead weights when time’s are tough. To get into the business because times are tough would be a race to the bottom.

for Tesla, it would be far more expedient (and lower corporate compliance load, etc.) to address the current financing environment by doing what they’ve already been doing: reduce margins and MSRP to effectuate an effective reduction in monthly payment (as Musk has reiterated often these days - interest rates proper don’t motivate/deter buyers, all-in monthly payment does).

Never say never, but I don’t see Tesla getting into the lending/financing business anytime soon.

 

[JBee]

Musk answered this question at investor day this year.

Auto manufacturers can’t play bank without becoming a bank. That’s the point of of regulations work: they don’t care if you call yourself a ‘bank,’ they care if you behave like one.

Existing OEM financing companies exist, but are standardly ‘financiers of last resort’ meaning they stretch lower than most banks are willing, or less commonly instead take the cream of crop borrowers when attached to promotional APRs.



For Tesla, there exists a basic cost of capital. To lend on cars, at reduced interest rates, runs up against Tesla’s cost of capital. Which means for every $1 they might loan at reduced rates, they’d be left coming up with a $1 at market rates for other projects such as infra build-out, etc.

But for the same reasons, these ‘in house’ financing companies make sense when times are good, and become lead weights when time’s are tough. To get into the business because times are tough would be a race to the bottom.

for Tesla, it would be far more expedient (and lower corporate compliance load, etc.) to address the current financing environment by doing what they’ve already been doing: reduce margins and MSRP to effectuate an effective reduction in monthly payment (as Musk has reiterated often these days - interest rates proper don’t motivate/deter buyers, all-in monthly payment does).

Never say never, but I don’t see Tesla getting into the lending/financing business anytime soon.

Admittedly, lowering product costs are always going to benefit both manufacturer and customer, whereas offering finance is only adding risk, where the company is providing yet another service, that it has even less control over, given the size of financial markets and whims of the fed that has a monopoly on currency creation.

"If" I was a TSLA investor, which I'm not, I'd be strongly against a version of "vendors terms", especially as a manufacturer that is dependent on a supply chain, all of which is subject to same financial fabric, and sensitive to interest rate limited investments as well. The better way would be to keep cash in hand and diversify my capex spending accross the globe. Cash is the ultimate resource allocation tool, and not having to ask a financier to take a punt on your dreams and ambitions, has got to be worth it's weight in gold.

But if anything, I'd start my own crypto on X, market and trade everything I made there, and bypass the whole caboodle to become my own fed. It is a private company after all too, and what EM was looking at doing before handing over X n Co last time.

 

[Crissa]

Old topic, but the TLDR is: You can't just lend money, even if you have cash. Banking is super regulated, and they don't like you just setting up a bank.

Which is fair! There's a long history of those who didn't do the due diligence losing people alot of money by setting up banks who shouldn't have.

-Crissa

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