Higher borrowing costs and the ongoing turmoil at U.S. regional banks is set to end the pandemic boom that lifted Tesla to the top of the global auto industry.
Speaking to shareholders at the company’s annual general meeting held at its Austin factory, CEO Elon Musk said rising interest rate payments were making it difficult to move the estimated $100 billion worth of goods he’s producing this year.
The flow of affordable credit in the economy has been gummed up by multiple Federal Reserve hikes and the collapse of lenders like SVB and First Republic. Since Tesla doesn’t have a captive financing arm like many of its automotive competitors, Musk’s customers will need to find another source for loans—like the regional banks distracted by the current crisis.
“If they’re on their way to the cemetery, increasing their auto loan portfolio is not the first thing on their mind,” Musk said on Tuesday. “So this is going to be a challenging 12 months, I want to be sort of realistic about it.”