Tesla Taps into Booming Demand with a Grand Lease Securitization Plan

By Kevin Armstrong
Tesla to start securitization through vehicle leases
Tesla to start securitization through vehicle leases
Tesla

As the Big 3 went on strike, costing Ford, GM and Chrysler billions, Tesla is making big money moves in order to spend more. Tesla has started its grandest lease securitization project to date, which is set to redefine its financing strategy. The company is initiating the securitization of a staggering $1.8 billion worth of its electric vehicle leases, paving a path for a sophisticated financial instrument that can potentially foster the company's growth. This massive cash grab may be needed if rumors of the new production advancements are true.

What Does it Mean?

Tesla has started a process called "securitization." This is a financial strategy where they bundle together many car leases and sell them as bonds to investors. Tesla is packaging $1.8 billion worth of car leases in this case. This strategy allows them to get a large sum of money now instead of waiting for the lease payments to trickle in month by month. This is the same as getting a full year of pay; all you did was promise to do your job for the next year.

Tesla is doing this now because it wants to have more money on hand to create more leasing opportunities for potential Tesla drivers. When they sell these bonds, they will get a large amount of money that they can use to offer more leases to customers, essentially expanding their business, Giga Mexico is coming, and potentially boosting their profits.

By turning leases into bonds, Tesla effectively leverages its existing assets to garner immediate liquidity. This strategy entails the creation of financial instruments backed by the value derived from Tesla’s leases, which are then marketed to investors, offering them a structured debt investment with different tranches of risk and returns. The issuance is segregated into various classes, with ratings spanning from Triple-A to Double-A, targeting a diverse risk appetite of the investors, ranging from conservative to moderate. This is a big money move, considering their Master of Coin has stepped down.

An Established Strategy with a Fresh Magnitude

As the financial specialists monitor the dynamics, there is a consensus on the resilience showcased by U.S. consumers in the wake of the Federal Reserve’s aggressive interest rate hikes. Elon Musk has loudly spoken out about the rate hikes and urged the Fed to reverse the massive increases. Now, Tesla can use the hikes to its advantage as more buyers may be looking for a short-term lease instead of a long-term one, which would lock them into a higher rate for a longer period.

This financial maneuver is not new in Tesla's playbook; however, this issuance marks the largest since the inception of such undertakings in 2014. The issuance of these asset-backed securities is designed to drum up about $1 billion, transforming the vehicle leases into a liquid asset that can foster Tesla's business acumen in navigating the corporate finance landscape.

The proceeds from this strategic financial endeavor can potentially fuel Tesla's ambitious expansion plans, serving as an alternative reservoir of funds apart from the conventional corporate bond market. This comes at a pivotal time when Tesla’s share has seen a remarkable uptick, soaring by 124.1% year-to-date.

Tesla plans to create different groups or "classes" of bonds to sell, with some being safer investments and others offering the potential for higher returns. This strategy is designed to attract a wide variety of investors, including those who prefer to play it safe and others willing to take on a bit more risk for a higher reward.

This strategy seems to be well-received as Tesla's share prices have gone up, indicating that investors have confidence in Tesla's plans. Moreover, people are still very much interested in leasing Tesla cars despite the general rise in interest rates.

Tesla Targets Sentry Mode Vampire Drain: Upcoming Update to Slash Power Use by 40%

By Kevin Armstrong
Sentry Mode Update is Coming
Sentry Mode Update is Coming

In an exchange on X, Drew Baglino, Tesla’s Senior Vice President of Powertrain and Energy Engineering, addressed the concerns regarding the power consumption of Tesla’s Sentry Mode. Responding to a user inquiry, Baglino confirmed the company’s commitment to reducing the feature's energy use by approximately 40% through a software update expected in Q2, which begins on April 1.

This announcement follows feedback from Tesla owners regarding the 'vampire drain' experienced when using Sentry Mode, highlighting Tesla's responsive approach to customer feedback and its dedication to continuous improvement. Another X user stated that there should be a breakdown or battery usage. This information already exists, but Baglino politely responded: The energy app provides a wealth of information about where your energy goes. He also linked to our Not a Tesla App article explaining that system.

Understanding the Drain of Sentry Mode

Sentry Mode is an advanced security feature for Tesla vehicles, leveraging the car’s cameras and sensors to monitor and record surroundings for potential threats when parked. Sentry Mode has proven invaluable for vehicle security by activating various deterrents, including pulsing headlights and alarm sounds.

Despite its benefits, the feature’s energy consumption, referred to as “vampire drain,” has been a concern, with estimates suggesting a small yet consistent drain on the vehicle's battery life. By optimizing Sentry Mode's power usage, Tesla enhances the feature's efficiency and extends the usability for owners, particularly when parking for extended periods without access to charging facilities.

Battery Management: Recognizing the importance of battery preservation, Sentry Mode automatically deactivates when the battery level falls to 20%, ensuring that the vehicle remains operational for essential travel.

Activation and Customization: Owners can activate Sentry Mode via the vehicle's touchscreen or mobile app, with options to customize settings, such as disabling sounds or excluding specific locations, tailoring the security feature to individual preferences and requirements.

Tesla's forthcoming software update aims to significantly reduce Sentry Mode's power usage, making it more adaptable for various situations without impacting the car's range or battery longevity. This enhancement aligns with Tesla's commitment to continuous improvement via over-the-air updates, directly responding to customer feedback with practical solutions. Owners looking forward to this change appreciate the balance between maintaining Sentry Mode's security benefits and preserving battery life for everyday needs.

Tesla Adds 'Rose Gold' Cybertruck Wrap and Two Other New Colors

By Kevin Armstrong
Tesla now offers Cybertruck wraps in five colors
Tesla now offers Cybertruck wraps in five colors

Remember when there was concern that the appeal of a Cybertruck would die down because there would be too many stainless steel beasts on the road? True story. If there was a concern, it appears to have been handled with wraps; not only Tesla’s wraps but more customized wraps are showing up on social media daily.

More Tesla Wraps

Firstly, Tesla has expanded its palette of Cybertruck wrap options, introducing three vibrant new colors. The chic Satin Rose Gold, the deep Satin Abyss Blue, and the sleek Slip Grey are joined in the lineup alongside the classic Satin Stealth Black and Satin Ceramic White. However, several Cybertruck owners are not waiting for Tesla wraps as more unique Cybertruck wraps are showing up on social media.

Priced at $6,000, while the newly introduced Satin Rose Gold and Satin Abyss Blue wraps are slightly pricier at $6,500. This differentiation in pricing reflects the unique appeal and quality of the new wrap colors.

Tesla outlines several key features and advantages of their Cybertruck color paint film, including:

  • A self-healing, urethane-based film that is significantly more durable and twice as thick as the average vinyl wrap, ensuring superior protection against scratches.

  • An environmentally friendly alternative to traditional vinyl wraps, covering all exterior stainless-steel surfaces of the Cybertruck, enhancing its aesthetic appeal and resilience.

Customized Wraps are Taking Off

Since Tesla wraps were introduced, the company has been criticized for the price point being far too high, while consumers can go to other wrap companies and get their own customized look. Even the unique wraps spotted on the Cybertruck before the delivery event are unavailable. But that is not stopping consumers.

It was after Investor Day in 2023 that Morgan Stanley's managing director, Adam Jonas, a well-known figure within the investment community and someone who has been dubbed a Tesla Bull. Jonas outlined several reasons why he believed the Cybertruck might not fulfill the grand visions held by Elon Musk and the Tesla team, describing it as potentially becoming a "financial side-show," a marker of cultural zeitgeist, and a niche product for enthusiasts.

Jonas argued that the Cybertruck, with its avant-garde design, might not align with this broader affordability mission. He believed that the unique aspects of Cybertruck would be lost and that "indescribable something," when several were on the street,

Yet, the landscape around the Cybertruck and Tesla's position within it has continued to evolve. Contrary to concerns, the burgeoning market for custom and aftermarket wraps for the Cybertruck tells a different story. This vibrant ecosystem of personalization options highlights the vehicle's position as a mode of transportation and a canvas for individual expression.

The concern that the uniqueness of the Cybertruck could diminish with its popularity overlooks the creative solutions that owners and enthusiasts have embraced. From bespoke wraps that offer myriad designs outside of Tesla's offerings to the DIY spirit that has taken hold among the Cybertruck community, it's clear that individuality remains a cornerstone of the Cybertruck experience.

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