Blogs

10 May 2017

Elon Musk: don’t buy a Tesla


Share article:

Elon Musk: don’t buy a Tesla

Road in forest for Tesla article

If you are in the market for a Tesla you’re probably better off leasing rather than buying one. That is the message from inc.com’s article on a twitter conversation between the man himself, Elon Musk, and one of his Twitter followers, regarding the high speed turn around on Tesla car upgrades.

In a recent exchange on the social media platform Twitter, fans asked if it may be possible for Tesla cars to be retrofitted with new product features, instead of having to buy a new car each time the manufacturer introduces a new upgrade.

Elon’s response was emphatic. He said, “Tesla will never stop innovating. People are buying the wrong car if they expect this. There will be major [revisions] every 12 to 18 months.”

As shocking as this may be for Tesla fans, this is not a new concept. Companies all over the world are doing the same thing, releasing one product only to go back and improve the recently released technology and launch a newer, more innovative version before their competitor does.

The rapid speed in which technology moves not only affects the general consumer population but businesses too. With technology moving at such a frantic pace, how do businesses keep up with the latest equipment without exhausting their capital and that of their shareholders? Keeping unproductive, out of date equipment can be debilitating to a business but so can a lack of financing options.

Luckily, there is an obvious solution for businesses who wish to always have access to the latest technology but don’t want to spend substantial amounts of money for this privilege: work with a funder who is able to be flexible and structure a solution for you and not a ‘one size fits all’ standard product.

Using an asset finance solution, such as a leasing product, means you can upgrade the asset at the end of the term, as well as many other benefit including freeing up business capex to use on other areas of the business. So if your business needs access to state-of-the-art plant and equipment, it’s critical to explore alternative finance solutions.

  • Only pay to use the equipment

Businesses that choose to buy assets outright experience a substantial drain on their cash flow. By partnering with an asset finance provider, businesses can avoid this problem and take back control of their costs.

  • Reduces large capital outlays

By not buying assets outright and opting for an asset finance solution, company funds no longer need to be allocated to pay for plant and equipment. Instead the assets are able to come off balance sheet and the funds can be used for other purposes such as growing the business.

  • Opportunity to upgrade equipment quickly and easily

Another benefit of this is being able to access the latest technology. Firms that own their equipment tend to hold onto them for longer than those that lease their assets as a way to make the most of their investment.

This can be a false economy as old equipment can reduce a company’s competitive advantage. With technology moving at such a rapid pace, using assets that have become slow due to age, general wear and tear, or have become obsolete, can be detrimental to productivity. Leasing assets avoids this and helps enterprises to stay at the top of their field.

  • Repairs and maintenance

Some agreements will also include the cost to service and maintain the equipment, often one of the highest expenses related to an asset. For businesses that choose to buy their assets, the risk is that repairs and maintenance may be delayed for cost reasons.

This will never be a problem if maintenance costs are included, and reduces the potential for equipment to breakdown. This helps maintain business productivity given any equipment downtime costs the business financially and operationally.

Businesses, large and small, cannot afford to ignore the benefits that asset finance solutions can deliver. The cash flow and competitive advantages this provides help companies to remain profitable and competitive and offers the opportunity to grow. Don’t think of it as asset finance, think of it as growth capital.

Related Blogs, News

4 September 2018

Equipment Demand Index- Capital Expenditure

Read

28 May 2018 by Maia Financial

IFRS 16- challenges and opportunties in the new leasing standard

View PDF

13 February 2018

New Zealand Tipped for New NZD$70 Billion Capital Formation Record

Read

Subscribe Here

See how your business compares to other market players and receive free regular reports.

*Required fields

Discover our latest research reports:

September 2018

Equipment Demand Index- Capital Expenditure

Read

February 2018

New Zealand Tipped for New NZD$70 Billion Capital Formation Record

Read