With money not getting any easier to get hold of for businesses or private people, Elon Musk thinks that manufacturers will ever more turn to leasing companies to be the intermediary between themselves and customers, offering more funding options and creative funding choices than garages are used to dealing with. Even if you don’t know who Elon Musk
is you will no doubt be familiar with or have used one of his companies products or an idea that he invented. With Paypal
probably being the best example, you can see where I am coming from. On just about every occasion that he has forecast a change he appears to have had a glass ball
Another example of Elon Musk predicting (some would say influencing) a change in a market is with Tesla electric cars.
Having not only funded the start up, he went on to design the original car and the drive train, a drive unit that is now built for Toyota and Daimler among others by Tesla motor company. Less well known in the UK is one of his massive success stories, Solar City. The largest provider and installer of solar packages in the US, including charging points for electric cars that are all across the United States, where combined solar and cable transmitted electricity is used to charge cars.
Just this week, Elon Musk has said that everyone should lease their cars all the time, even second and third owners. His view is that it is better to have a new car or a used one with a known pedigree and have a fixed monthly payment to use it with all the warranty cover that comes with having a new or guaranteed car. The second and third owners, with the back up of the manufacturer and a servicing garage, should have most of the same benefits, but of a 3 or 6 year old car, and paying less per month
This is obviously what we call leasing, with contract hire being just one example of. Available to private customers as well as in the form of business car leasing, the low capital requirement to get your next car has always been attractive to companies and private drivers alike.
As the future value of a car is the thing that effects your monthly payment most, a plan where the three owners in a row, each for three years, have assured future values in each case, means that the payment for each lease is known in advance. Musk has in Tesla’s case guaranteed to buy the cars back in three years at a fixed price, with the money being assured with purchase bonds already paid for. By this method, the price of the next lease, years 4 to 6, is already mapped out
What Tesla have done in the US is to guarantee the batteries for the whole of the nine year period, taking away the greatest fear and potentially the largest cost risk of an electric car. With routine maintenance being minimal, we think he is right again, let us know what you think on our Facebook page directly or check the short version and comment directly
