Tesla.Ltd. TSLA CEO Elon Musk previously expressed concern about the impact of rising interest rates on car purchases and suggested it could push car prices even lower.
what happened: of company website Represents a loan from a Tesla financier or a third-party financier that has a tenor of 36 to 84 months. The previous limit was 72 months.
This suggests that cash-strapped customers can now spread their payments over a longer period of time. Since March 2022, the Fed has been aggressively raising the Fed Funds rate in the current tightening cycle.
But Tesla’s latest payment plan also has a downside. If a customer agrees to an extended term option, they could end up paying more than the actual price of the car.
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Why it matters: Interest rates are now between 5% and 5.25%, their highest in 16 years, thanks to a series of aggressive rate hikes by the Fed. The central bank agreed to pause at its June meeting to assess the impact of rate hikes.
The Fed’s monetary policy-making body, the Federal Open Market Committee, is scheduled to meet next week to decide monetary policy. The futures market has priced in a near 100% chance that interest rates will rise by 25 basis points to 5.25% to 5.50%.
Central bank officials have continued to publicly hint that another rate hike could be forthcoming in the near future.
Mr. Musk has been a critic of monetary policy and has expressed concern in the past that the Fed will push the economy into recession.
Tesla closed Friday trading 1.10% lower at $260.02, according to the company. Benzinga Pro data.
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