But I don't understand ... if he's personally guaranteeing the put, why is the partnership with the two huge banks necessary? Aren't they just an interchangeable loan provider in this?
> why is the partnership with the two huge banks necessary?
The banks are providing: 1) cash 2) loan origination and servicing.
Tesla doesn't have a cool $1B in cash laying around to make 15,000 car loans. The banks do as they lend from customer deposits. Tesla needs the cash immediately to buy more parts / pay employees.
Also, Tesla doesn't have a team of people that know how to review and check credit. Nor do they have call centers to remind people to make their payments, and if they can't arrange a repossession.
>Tesla doesn't have a cool $1B in cash laying around to make 15,000 car loans.
Tesla doesn't need the cash in reserve to make loans to buy Tesla cars; such a "loan" in that case would simply mean "not requiring (immediate) payment". It certainly means forgoing some liquidity, but that's not the same as them having to come up with the purchase price for all their cars; they're paying themselves anyway.
Because Tesla do not have the privilege of printing money like banks do. Banks do not directly loan out money from depositors, they keep that money and print(punch in numbers in a computer) 10x that amount for loaning out.
That is a powerful privilege and the reason why it is smart to partner with a bank, even if you have money to spare.
> Banks do not directly loan out money from depositors, they keep that money and print(punch in numbers in a computer) 10x that amount for loaning out.
No. Only central banks can create money by printing it.
An ordinary bank (commercial, S&L, or credit union) cannot loan out more money than they take in. That's why it's called "fractional reserve" banking -- i.e., a "fraction" of deposits is not loaned out, but is instead held in reserve.
The 10-fold expansion of the money supply is caused by the multiplier effect, not by banks printing money. The only way to avoid that is for the bank to make no loans at all. Any fraction -- whether 1/10 or 9/10 -- will still lead to a multiplier effect. It's just a matter of how large you want the multiple to be.
