Electric car sales are trending upward in most of the United States, but the rising cost of battery materials is driving up the selling price of many electric vehicles. Add to that the recent increase in interest rates by the Federal Reserve, and buyers in the electric car market are taking a double whammy: higher prices and higher borrowing costs.

A better deal on electric car financing

Tenet is a Silicon Valley-based startup that uses data to create more affordable financing options for electric car buyers. He says traditional lending models don’t take into account many of the factors that make Evs unique. “Software upgrades, lower maintenance costs and tax credits mean electric vehicles need to be treated differently than gas-powered cars. Other auto lenders may not take this into account when pricing your loan, but we do,” he says on his website.

Tenet co-founder and CEO Alex Liegl says Canary Islands Media most American car buyers don’t get a fair deal on the loans they take out to buy electric vehicles and he says he has the data to back that up. For example, federal tax credits as well as state and utility incentives may not reach the buyer for a year or more after purchase, but they make buyers more likely to meet their monthly payments. .

“Our job is to transfer that to the point of purchase or shortly thereafter,” says Leigl. “When they buy their vehicle, they can apply it as a deferred down payment” through a structure that Tenet designed with its lending partners.

Electric vehicles also cost less to fuel and maintain than gas-powered vehicles, reducing the monthly financial burden on their owners. Finally, if an owner defaults on the loan, used electric vehicles tend to be worth more than conventional cars. This higher value should also factor into the loan calculation, Leigl says. It’s all there in the data that Tenet assembles. “The more data we are able to collect, the more efficiently we can price our consumer loans and the more savings we can achieve.” The upshot, he says, is that electric car buyers have better credit risk and that should be a factor in the lending process.

Image reproduced with the kind permission of the tenant

Tenet does not carry loans on its own balance sheet, Liegl explains. Instead, it earns money from banks, credit unions, automakers, dealerships, and other financial partners who use its underlying data analytics to “connect the dots and align those incentives.” . »

The company has so far enabled several thousand loans, is active in 33 states and aims to get at least 10,000 electric vehicles financed by the end of 2023, he said. On average, these loans offer monthly payments about $150 lower than payments on loans for electric vehicles that are made in more conventional ways, Tenet said.

Nick Christian, head of specialty finance for Silicon Valley Bank, says finance units at most major automakers have been offering special offers for EV loans for years, as have some banks and credit unions, but “they do not subscribe differently for electric vehicles than for an internal combustion engine vehicle.

In other words, these offers are not necessarily supported by an underlying analysis of the data that could justify them, he said. Tenet, on the other hand, has gathered relevant data on the ability of electric vehicle buyers to repay their loans and the long-term value of the asset they’re borrowing against in a way that Christian has yet to see. other auto lenders. “I suspect that if someone is successful, there will be imitators,” he said. “But they are the first.”

Treehouse simplifies electric car charger installations

Treehouse is another Silicon Valley startup that has implemented a data-driven approach to aggregating the cost of purchasing and installing home EV chargers. Many automakers and car dealerships offer EV buyers discounts on home chargers, but few offer help determining how much it will cost to install those chargers. Treehouse CEO Eric Owski says Canary Islands Media none of them include the cost of the installation of the charger in the loan for the purchase of an electric vehicle. Treehouse and Tenet plan to start doing precisely that in the first quarter of 2023.

“Most EV owners get pretty poor point-of-sale advice” on how to prepare their home to charge their new EV, Owski says. This can be a problem for homes with inadequate electrical service to support heavier load loads or wiring that does not extend to where they park their cars. “Anecdotally, probably 10-20% of electric vehicle buyers have encountered a problem that they wish they had known about in advance. For a small percentage of them, this becomes a real disruptive factor.

Treehouse collects data from potential customers via an online form that asks a relatively simple set of questions – home address, building type, preferred charger location, and the location and amperage of the electrical panel. It combines this information with a growing stock of its own data to provide an estimate of the installation cost.

The company has hired its own electricians to carry out installations and also contracts with third parties, which can save “hundreds or even thousands of dollars” on initial and ongoing charging costs. It will be important to reduce costs and the complexity of EV ownership to help EV adoption go beyond “many early adopters who were ready to break through barriers on their own,” he said. “I think we’re seeing the consumer perspective change as EVs reach that tipping point. Everything has to work fine.”

A recent survey by EV charging company Volta found that nearly 60% of people planning to buy an EV in the next 12 months have household incomes below $75,000 per year, while fewer a third of current EV owners have incomes below this threshold. This means that this new class of buyers will be particularly cost-conscious.

One foot in the ESG door

Treehouse and Tenet see the electric car as an entry point into a general overhaul of how electricity is used in the home. “Consumers are much more open to broader electrification options once they have an EV in their home,” says Owski. Liegl adds that electric vehicles are a “natural entry point” for broader electrification of home heating and cooking and other home decarbonization and efficiency measures. “We want to be that financial network for the climate economy.

Silicon Valley Bank also has its eye on ESG values. Nick Christian says that, like many banks, it has experience bundling individual loans into asset-backed securities, including loans for the installation of residential solar systems. Securitization has helped lower the cost of capital for rooftop solar systems and could play a similar role for electric vehicles and broader investments in home efficiency, he noted. “If we can help [Tenet] like we would for a normal consumer lender, but also doing something that’s good for the wider environment, that’s a plus for us.

Electric vehicle loan packages could be more valuable than gasoline car loan packages. Although the ESG value of securities backed by electric vehicle loans has not yet been established, the fact that purchases of electric vehicles replace purchases of polluting fossil fuel vehicles is likely to have a value in the market, Liegl says.

In fact, data on how electric vehicles are driven could make such loans even more valuable as ESG investments, he noted, as it can provide a record of how much pollution and carbon emissions are being generated. ‘they steer clear of gasoline-powered vehicles. This gives investors “an insight into how much CO2 they are helping to avoid. They can start tracking their climate impact and start thinking about how this fits into their overall ESG goals.

Takeaway meals

For years we at Clean Technica touted the benefits of an electric car. Primarily, we tend to focus on reducing the carbon emissions associated with electron driving, but maybe we can’t see the forest for the trees.

Electric cars are a hall in a whole new way of seeing the world. If you drive an electric vehicle, you are much more likely to be interested in rooftop solar, a home battery, heat pumps and ways to use your vehicle to help you and your family. in the event of a power failure.

What we are seeing is the beginning of a change in attitude. Let me explain. At one time in America, everyone smoked. Today? Not really. Attitudes are changing, and Tenet and Treehouse are harnessing those changes. What they haven’t even anticipated yet is the impending drop in value of used conventional cars. This is when the difference between financing gasoline cars and electric cars will become fully apparent.


 

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