Startups rely on data-driven insights to reduce the…
According to Alex Liegl, co-founder and CEO the start of the financing of electric vehicles Principle – and he has the data to back it up.
For example, why don’t the loans take into account the federal tax credits and state and utility incentives you get when you buy a VE? This money may not reach the buyer for a year or more after purchase, but they are more likely to keep up with their monthly payments.
Electric vehicles also cost less to fuel and maintain than gas-powered vehicles, reducing the financial burden on their owners. And if the owner defaults on the loan and the lender has to repossess the car, used electric vehicles tend to be worth more than conventional internal combustion engine cars – and the higher value of that collateral should also worth something.
Tenet’s Unique Vision VE loans combine all of these factors into a package that helps consumers by “recognizing the unique attributes of electric vehicles,” Liegl said. What the market has lacked so far is the detailed data to back up its gut feeling that VE buyers have lower credit risks. “The more data we are able to collect, the more efficiently we can price our consumer loans and the more savings we can achieve.
Since his 2021 founder, the Silicon Valley startup raised a $18 million round seeds financing and has signed a number of automotive and financial partners with this premise. Last month he got a $20 million credit facility of the Silicon Valley Bank, which will allow it to “source up to $20 million in VE loans per month,” he said.
Tenet does not carry the loans on its own balance sheet, Liegl explained. Instead, it makes money from banks, credit unions, automakers, dealerships, and other financial partners who use its underlying data analytics to “connect the dots and align these incentives.
The company has granted several thousand loans so far, is active across 33 states, and aims to achieve at least ten,000 EVs financed by the end of 2023, he said. On average, these loans offer monthly payments of around $150 less than payments on loans for electric vehicles that are made more conventionally, Tenet said.
The availability of more attractive loans could play a big role in accelerating VE adoption by U.S. consumers, said Nick Christian, head of specialty finance for Silicon Valley Bank. About 85 percent of car buyers in the United States finance their vehicle purchases.
Lower borrowing costs will also become increasingly important to make electric vehicles more affordable as states like California mandate increasing percentages of new cars sold as electric vehicles and move toward banning the sale of new gas-powered vehicles from 2035. And as interest rates rise across the board, it’s especially important to keep monthly loan payments as low as possible.
Builder finance cells offer special offers for VE loans for years, as have some banks and credit unions, Christian said. 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 the relevant data on VE buyers’ ability to repay their loans and the long-term value of the asset they’re borrowing on, in a way that Christian has yet to see other auto lenders do.
“I suspect that if someone is successful, there will be imitators,” he said. “But they are the first.
Simplify the VE ownership experience
Tenet is working to reduce VE buyers’ costs in another way as well: streamlining the installation process VE chargers at customers’ homes. For this, the company has partnered with Tree houseanother Silicon Valley startup that has developed a similar data-driven approach to bundling purchase and installation costs VE home chargers.
Many car manufacturers and dealers offer VE buyer discounts on home chargers from various technology vendors. But few offer help in estimating how much it will cost to install these feeders, Treehouse CEO Eric Owski said – and no one he knows of is bundling the cost of installing the charger into the loan for the purchase of a VElike Treehouse and Tenet plan to start doing in the first quarter of 2023.
“More VE homeowners get pretty poor point-of-sale advice” on how to prepare their homes to load their new VE, Owski said. This can be a problem for homes with inadequate electrical service to support heavier loads or wiring that does not extend to where they park their car.
“Anecdotally, probably ten at 20 percentage of VE buyers encountered a problem they wished they had known about in advance” related to home charging, he said. “For a small percentage of them, this becomes a real deciding factor.
Treehouse collects data from potential customers through a online form which asks a set of relatively simple questions – the home address, the type of building it is in, the preferred location of the charger, and the location and amperage of the electrical panel – and combines this information with a growing stock of its own data to provide a cost estimate for implementation.