Tesla is now offering 84-month terms for their vehicles
Not a Tesla App
Tesla unveiled an 84-month financing term for its U.S. customers. This initiative, which extends the company’s maximum loan tenure from 72 months to 84 months, provides a more flexible financing option amidst rising interest rates and emerging market pressures.
The announcement comes in the wake of Elon Musk’s acknowledgment that the electric automaker needed to respond to the mounting pressure exerted by interest rate hikes. Musk, a known critic of the Federal Reserve, has expressed concern over rate increases that he believes substantially escalate the likelihood of a severe recession.
The default loan term for Tesla is still a 72-month loan, but you can now increase the loan term up to 84 months. However, doing so does bump up the interest rate.
Responding to Rising Interest Rates
"When interest rates rise dramatically, we actually have to reduce the price of the car, because the interest payments increase the price of the car," Musk stated during Tesla's July 19 earnings call. He further emphasized that Tesla "had to do something about that."
While longer-term loans bring with them the advantage of lower monthly payments for consumers, it's worth noting that the total cost might be higher due to accrued interest over the loan's lifetime. Additionally, there's an inherent risk of depreciation, with vehicles often losing significant value within the first few years of ownership.
A Strategy to Drive Up Demand Amid Production-Sales Gap
Despite these considerations, other carmakers' 84-month auto loans have seen a rise in popularity in recent years. The new financing term by Tesla, which aims to counteract the financial strain caused by interest rate increases, may rekindle interest in such extended loans.
This option is expected to increase Tesla's appeal to potential customers who may have been on the fence due to financial constraints. By reducing the monthly payments, Tesla's vehicles become more accessible to a larger consumer base, potentially driving up demand.
However, this development comes when Tesla has been dealing with a disparity between production and sales. While the company delivered a record 466,140 vehicles in Q2, it has sold fewer cars than it's produced over the last five quarters.
Despite anticipated minor dips in production due to factory upgrades, Tesla is optimistic that this new financing option, combined with other measures like the Full Self-Driving transfer policy, will bolster its market position.
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Tesla China has outlined some features in Tesla’s latest update in the region, which is version 2024.26.9. In the list of features, Tesla mentions many of the features we’re already aware of, including Automatic Emergency Braking Improvements, YouTube Music and more, but they also reveal one additional feature that’s exclusive to China. The new feature allows the new blind spot indicator to light up if there’s something in the way when you’re opening your door. The blind spot indicator is exclusive to the new Model 3 and Cybertruck, which features little red LEDs in the front speaker grills next to the mirror.
Blind Spot Door Warnings
With update 2024.26.9, Tesla says that if any vehicle door handle button is pressed on vehicles with a Blind Spot Warning Light (currently just the 2024 Refreshed Model 3 Highland and the Cybertruck), the blind spot warning indicator in the vehicle’s front speakers will illuminate.
This object detection includes cars, pedestrians, cyclists, and “other objects”. We’re not quite sure what fits into the “other objects” category, but likely things that FSD picks up on normally – including traffic cones, bollards, and other large obstacles.
According to Tesla’s description, there appears to only be a visual warning for the driver and front passenger, with nothing displayed on screen or an audible tone. We’re sure Tesla will continue to expand and refine this feature like they’ve done with various features in the past, but for now, it's only available in China. Blind Spot Door Warnings need to be enabled under Controls > Safety before this feature will function.
We’d love to see Tesla use the ambient light strip in the vehicle to warn passengers and drivers when their door is obstructed – it would be a fantastic use of a luxury feature for utilitarian safety – rather than just the single red LED inside the door speaker. Additionally, an audio warning would be excellent for those who may not see the red dot.
Tesla appears to be making progress on FSD in China, with the latest update available in the region now displaying the FSD button in the vehicle. Tesla makes no note of the change in the release notes, nor does it appear to be available in any other regions that are expected to receive access to FSD in the future.
FSD in the UI
In the Autopilot options in China, users could previously select Traffic-Aware Cruise Control or Auto Steer (Beta), however, as of 2024.26.9, the Full Self Driving (Supervised) button is now visible – but greyed out. Tapping on the option doesn’t do anything just yet, but the addition of the button could be a hint that Tesla is planning to enable the feature soon.
Underneath the Autopilot selection, Tesla also has a phrase that says, “Full Self-Driving (Supervised) needs to use an updated version of navigation maps. Connect to Wi-Fi to download” (Thanks, Luis Zhu). It’s possible the option is greyed out because the software needs updated maps to work. There are no reports yet of what happens when the navigation map is downloaded.
We previously reported that FSD was on hold in China, even after Tesla received approval to start testing FSD in China. This flip-flopping is interesting but could be due to regulatory issues between China and Tesla regarding data collection and where the data is stored. Now that the button is in the UI – Tesla is clearly confident that it either has received approval or will in short order.
It certainly appears that Tesla is going to be opening up FSD in the region fairly soon. It’ll be interesting to see if Tesla uses the same Safety Score feature they used in the U.S. when choosing drivers to beta test the program.
Elon Musk previously mentioned that FSD (Supervised) would be rolling out to global markets, including Europe and China, as Tesla received approvals from governments in those nations.
