Posted on by John Ebbert

Tesla Taps DeFi Deal to Seed Construction of Collision Repair Shops

Last week, MakerDAO quietly divulged that Tesla will use MakerDAO’s debt financing capabilities in coordination with 6s Capital in order to build out a collision repair shop strategy.

The Defiant reported, “On March 30, 6s Capital, a commercial lender powered by MakerDAO, closed a real estate financing deal worth $7.8M for Tesla…”

As MakerDAO’s Nik Kunkel told Bankless podcast‘s David Hoffman, the potential long term benefit to Tesla and its stock price is the ability to roll out a wider strategy for collision repair that does not create capital expense but rather, operational expense, given the beneficial way MakerDAO’s loan system works.

On the details, Kunkel said (lightly edited for clarity):

“What’s happening here is that Tesla wants to build a network of collision repair centers, I believe right now in the US, but I think eventually it’s supposed to be a global thing. But they don’t have the capital to build all of these things themselves. And if you think about them doing a capital raise, debt on your balance sheet isn’t the best thing when when you start like analyzing the health company – it would really slow down their ability to execute on this right, [if] it shows up as a capital expenditure.

So what they’re doing is they’re using credit tenant leases, in order to raise the cash to build these. So what a credit tenant lease is, it’s essentially saying that if someone (i.e. 6s Capital) were to finance the construction of this, then Tesla will promise to pay a certain amount of rent. Every year for X number of years, and maybe the amount increases by Y percent per year.”

Granted, the initial $7.8 million loan isn’t huge in comparison to the extraordinary cost of a country-wide real estate strategy for repair shops. But, the testing process for this type of financing is underway.

For background, on the MakerDAO website, the decentralized cryptocurrency organization explains the two different tokens it issues using its Maker Protocol:

      • Dai – a collateral-backed stablecoin that offers stability. The Maker Foundation and the MakerDAO community believe that a decentralized stablecoin is required to have any business or individual realize the advantages of digital money.
      • MKR – a governance token that is used by stakeholders to maintain the system and manage Dai. MKR token holders are the decision-makers of the Maker Protocol, supported by the larger public community and various other external parties.

Last fall in one of the first agreements between the TradFi and DeFi banking worlds, Forge, a subsidiary of French banking giant Société Générale, announced its own “petri dish” financing test when it raised a $20 million loan using MakerDAO’s DAI stablecoin.  Read more on Medium.

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