Home Auto News Lucid Chooses Bank of America as its Lending Partner

Lucid Chooses Bank of America as its Lending Partner

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Lucid’s usage of a bank for its funding mirrors comparable moves by other EV starups.

Startup carmanufacturer Lucid revealed Monday it picked Bank of America as its chosen loaning partner for Lucid clients using for brand-new vehicle funding. The brand-new service can be done online at Bank of America, or through Lucid’s representatives.

“The tactical relationship inbetween Lucid and Bank of America is another method of boosting and enhancing the vehicle purchasing experience for Lucid consumers,” stated Amira Aly, director of monetary services at Lucid.

Proof of Lucid’s growing service

Lucid started shipment of the Lucid Air in October, and the business states that it has more than 17,000 bookings. Adding a chosen lendinginstitution needsto make it mucheasier for capacity clients to buy one, specifically offered it can all be managed online. 

“This funding option was established for Lucid to make it mucheasier for consumers to financing electrical lorries,” stated Fabien Thierry, head of vehicle financing items at Bank of America. 

Lucid general assembly line Sept 2021
Lucid has more than 17,000 appointments for its Air designs.

A various design for vehicle funding

Other start-ups have comparable funding plans. 

Rivian Financial Services, the funding arm of start-up carmanufacturer Rivian, does have its own monetary arm, however it works with Chase as its personal label partner in the U.S., with Scotiabank supplying the verysame service in Canada.

Similarly, Tesla works with Wells Fargo and U.S. Bank to organize vehicle funding. All business state that funding can be dealtwith digitally, and purchasers can setup their own third-party funding. 

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A missedouton chance?

Once Lucid constructs anough of a monetary blend from revenues of its Lucid Air, the com-ay might develop its own captive financing arm.

This design is in significant contrast from tradition carmanufacturers, who have their own internal funding business, offering them with another income source. In truth, it was General Motors Acceptance Corporation’s capability to financing GM client brand-new vehicle loans that assisted offer it a leg up over Ford Motor Co., which didnothave a financing arm, in the early days of the auto market.

Today, the world’s top carmanufacturers have their own internal funding business, such as GM Financial, Ford Credit, Stellantis Financial Services U.S., Toyota Financial Services, Honda Financial Services, Mercedes-Benz Financial Services, and lotsof others.

But Lucid’s absence of a slave financing arm comes from a absence of money, a common issue for neophyte carmanufacturers, like Lucid, Rivian and evevn Tesla, which makes more cash from selling credits than selling cars.

Wells Fargo is one of the chosen partners for Tesla.

“It takes a lot of capital to begin, and Lucid doesn’t have the kind of cash it requires to loan to clients,” stated Sam Fiorani, vice president, worldwide vehicle forecasting at AutoForecast Solutions LLC. Whatever cash the business do have goes to developing their brand-new items and developing producing centers, service centers and other expenses. 

Fiorani states the brand-new business will most mostlikely develop captive financing arms, assoonas they have the cash.

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Captive investors finance the bulk of brand-new vehicle loans

The absence of slave financing arm is no little matter, provided that 85% of brand-new vehicle purchases are paid for by an auto loan. Of those loans, 70% are made through automobile dealers, according to the National Automobile Dealers Association. With that kind of income streaming to partners like Wells Fargo, Chase and US Bank, appearance for Lucid and its rivals to get on the funding bandwagon as quickly as it business financialresources license.

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