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Tesla should consider upgrading its financing arm ahead of Model 3

Wednesday, October 12, 2016 10:43
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(Before It's News)

With Tesla’s new product unveiling less than a week away, Elon Musk’s “unexpected by most” ambiguous language has led to a flood of speculation. Some think the new product will be a vehicle — perhaps the Model Y crossover SUV based on the Model 3. Or it could be the electric pickup truck Musk has mentioned on occasion, the electric tractor trailer he has hinted at, or the autonomous multi-passenger minibus concept built on the Model X chassis.

Instead of a vehicle, it could be a new suite of sensors, including a triple cam and more radar units for Tesla’s Autopilot system, a major announcement for SpaceX, or even a breakthrough in Hyperloop technology. Elon has so many irons in the fire, it’s hard to guess which one could spawn a new product.

Matthew DeBord at Business Insider has a wild guess that is interesting. He asks, “What if the new “product” is a bank?”  A bank obtains money through commercial lending channels at low interest and uses that money to make car loans at higher rates. There is quite a bit of profit involved. In fact, DeBord says, “I often say that dealers don’t sell cars — they sell car loans.” Presently, Tesla works with two major lenders to obtain financing for its customers.

He argues that Tesla is leaving money on the table by not being its own bank, especially when the number of cars it sells rises after the Model 3 is introduced. “Having ‘Tesla Financial’ would promote a more seamless process as the company really starts to grow sales,” he says. After all, it’s not like Musk is a stranger to the world of finance. He did make his fortune as the prime mover behind PayPal.

DeBord is extending the definition of “product” by taking it in an entirely different direction. But in financial services and insurance, companies often refer to a loan program or insurance policy as a “product.” Is Musk being too clever by half or is he hiding his intentions in plain sight, assuming most people won’t think of an alternative definition for the word “product?” Come next Monday, we will know.

The post Tesla should consider upgrading its financing arm ahead of Model 3 appeared first on TESLARATI.com.

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