6 ms·
Doesn't the credit go to Tesla when it is leased?
by ceterum_censeo 10y ago
Doesn't the credit go to Tesla when it is leased?
- mikeash 10y agoIt goes to the bank that handles the lease.
- ceterum_censeo 10y agoI guess that is my confusion, I thought Tesla was originating the lease.
- mikeash 10y agoTesla sells the car to a bank, and the bank leases it to the customer. For leases done through Tesla directly, Tesla just talks to the bank for you.
- ceterum_censeo 10y agoSorry, not trying to be difficult, but this doesn't clear things up for me. Are you saying that Tesla does not lease directly to the consumer?
- mikeash 10y agoYes, that's right. They present it as if it were direct, but they're really just acting as a front for a third-party bank. They don't have their own finance arm.
- ceterum_censeo 10y agoOk, got it now, thanks. Any idea why they have to list automotive leasing as a separate line item on their report? If they are selling it to a bank who is then responsible for the lease, why list it separately?
- mikeash 10y agoGood question! I went poking around and turned up this article: http://seekingalpha.com/amp/article/3988503-gaaps-treatment-teslas-sales-bank-leasing-partners-causes-companys-long-term-liabilities http://seekingalpha.com/amp/article/3988503-gaaps-treatment-... If I understand it correctly (probability: moderate?) then it's basically an accounting artifact. The fact that Tesla arranges the lease means they have to book the revenue differently. Somehow....
- ceterum_censeo 10y agoNice find, that helps. My reading is that it's slightly more than an artifact: Tesla is guaranteeing a residual, so the sale to the bank is conditional and so cannot be recorded as a simple sale. GAAP strikes me as a set of things that, alone, are good intentions but combined are more confusing than they need to be.
- mikeash 10y agoMakes sense. And thanks for your persistent questioning, I learned some new stuff!
- ceterum_censeo 10y agoThanks for your patience :) I learned some new stuff too!
- ghaff 10y ago>GAAP strikes me as a set of things that, alone, are good intentions but combined are more confusing than they need to be. That's probably reasonably accurate. GAAP is intended to prevent various accounting reporting practices that, historically, were sometimes used to obscure material aspects of a company's financial position. However, GAAP numbers may also present a company's numbers in ways that aren't the most meaningful or "fair"--at least in the eyes of the company. That's one reason that companies often present both GAAP and non-GAAP results.