July 25th, 2023 7:00am PDT
(PenniesToSave.com) – Tesla, under the leadership of CEO Elon Musk, has been attributing economic difficulties and margin pressures to the Federal Reserve and high-interest rates. Despite this, Tesla is now actively working to tackle these challenges.
Tesla (TSLA) has recently announced a new financing option for consumers interested in purchasing one of their vehicles. According to Automotive News, Tesla now offers the choice of an 84-month, or seven-year, loan term. This is an extension from their previous option of a 72-month financing plan.
This is an interesting development because auto loans that last longer than 60 months are typically considered long-term and not very common. However, longer financing terms have become more popular recently. While this option allows customers to benefit from lower monthly payments, it’s important to note that they will end up paying significantly more in interest over the duration of the loan.
Musk has expressed his concerns about the recent interest rate hikes by the Federal Reserve and their potential impact on the economy. He believes that an increase in interest rates could result in a significant economic recession. Musk has criticized the central bank’s approach, citing delays in their data.
To mitigate the impact of rising interest rates on consumers, Tesla has implemented measures to make their electric vehicles more accessible. One approach involves providing extended loan options through their captive finance company, making monthly payments more manageable for potential customers. Furthermore, federal EV tax credits also contribute to the affordability of Tesla vehicles.
To achieve its ambitious delivery goals and increase profits, Tesla is expanding its financing options. In addition, the company recently secured additional funds through the debt market to support its leasing operations.
As the upcoming Federal Reserve policy and rate decision looms, Musk might delve deeper into how these actions impact both consumers and Tesla’s business. He consistently emphasizes the significance of maintaining affordable prices for their cars in order to drive up sales volume. Recognizing the potential strain on consumers grappling with mounting debt becomes crucial in safeguarding the long-term success of the company.
According to Musk, the rising interest rates create difficulties for individuals in affording cars. This becomes even more challenging considering the already existing financial struggles experienced by many, as seen through the increasing credit card debt. This trend is concerning both for consumers and businesses alike.