Tesla’s price cuts have helped the automaker find new customers and grow its sales throughout the U.S. and other markets. But for companies that have made a business out of renting Teslas to customers on a subscription-based platform, it spells disaster.
Autonomy, a company that has quickly become the “Tesla” of its respective sector, nearly became a victim of these price cuts.
Scott Painter, CEO of Autonomy, has made Teslas and other electric vehicles available to people in a subscription, paying an up-front price and then a monthly rate that is more flexible than leasing and less expensive than a long-term rental.
The fleet of Tesla vehicles Autonomy has accumulated over the past few years has a value, and when the price cuts that CEO Elon Musk and other executives decided upon took effect, that value diminished significantly.
“Instead of having an $85 million fleet, we suddenly had a, say, $56 million to $57 million fleet in one day,” Painter said to Bloomberg. “We were very vulnerable to our lenders in that moment.”
The price cuts affected Autonomy’s business so much that it went through a forbearance process to gain $12 million in new capital and shrunk its workforce significantly from 120 to 45.
Painter and Autonomy initially planned to have 23,000 EVs ordered, as goals announced last year were pushed aside due to the depreciation of its fleet. Autonomy has 1,300 cars currently and will need roughly 1,700 more to break even, Painter said. This will require $20 million more in funding, which will likely unlock $100 million in borrowing capacity.
Autonomy continues to expand into new markets, making its subscription service available to customers across the U.S.
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