The credit card industry is in trouble.
In a matter of weeks, Tesla will likely be the first auto manufacturer to be sued over claims that it sold defective products to consumers.
It is an issue that has led to the loss of more than $500 million in consumer credit cards over the last year, and a number of lawsuits against automakers have been filed.
But as Tesla looks to repair its image, a key issue it must grapple with is how to make credit cards more appealing to customers.
It has already made changes to its products, but how can it change the behavior of those it’s sold credit cards to?
“We’ve made some changes to make it easier to use credit cards and make them less expensive,” said Elon Musk, CEO of Tesla.
Tesla plans to roll out a new credit card, which it is calling the Tesla CareCredit, on Monday.
It’s the first of a number that will allow Tesla to better reach consumers, and Musk says the company is going to “reinvent” the credit card business.
Tesla will begin selling the new Tesla Care Credit cards at select stores in North America on Monday, a move that comes as the company continues to fight the lawsuit.
“We think it’s an important step to take,” said Paul L. Fritsch, senior vice president of product marketing at the credit-card giant, during a conference call with investors.
“It’s a step that we feel very strongly about.”
Tesla is still the only major automaker to have a card business with a consumer credit card program, but it has been a hit.
The company was able to tap into a consumer’s love of Tesla vehicles, the company’s brand and the company itself, which was enough to make up for the problems of its first consumer credit-cards program.
Tesla started selling TeslaCareCredit in October of 2015.
At the time, Tesla said it was going to allow consumers to get TeslaCarecredit at their own convenience.
“We are also making TeslaCare credit available at Tesla stores nationwide, and we are in the process of rolling it out at other stores as well,” Musk said in a statement at the time.
TeslaCareCredit cards have two basic features.
One, customers pay a $2 processing fee and a $25 annual fee for purchases of $25 or more.
The second is a $5 annual fee that can be waived at Tesla locations.
TeslaCare Credit is available in most states, though Tesla will not sell it in all states.
Musk says Tesla is “actively exploring other payment options” for the card, but he doesn’t expect that option to be available anytime soon.
The biggest difference between TeslaCare and TeslaCare credits is that TeslaCare is available to the general public, while TeslaCare accounts are tied to the company and its brand.
Tesla says it is committed to getting its products and services onto as many people’s credit cards as possible.
“I think TeslaCare will be a fantastic way for us to reach more people, and it will make it possible for Tesla to grow and be even more profitable,” Musk added.
“But we have to make sure that the cards are really helpful and that they are actually helping people.”
TeslaCare credits will be available at select Tesla stores in the United States starting on Monday for $25.
Customers can then apply for a TeslaCare account at any Tesla store and pay $50 per year, up to $500 per year.
Tesla says TeslaCare cards will be free for the first year and will be discounted to $50 for the second year.
The first TeslaCare cardholders will get two TeslaCarecards per year for free.
Tesla will continue to offer the TeslaCare brand cards, which have a $1.95 annual fee and can be used for Tesla’s Model S, the Tesla Model X SUV and the Model X crossover SUV.
The credit card company says the Tesla card offers more flexibility than TeslaCare, including allowing customers to set up payment plans with the company.
Tesla said that people can also use TeslaCare to pay for items at Walmart, Best Buy, Costco and other retail stores.
Tesla also said that Tesla Care credits will work with all Tesla vehicles.
Tesla has announced that it will allow consumers who own a Tesla Model S or Model X sedan to use its TeslaCareCard credit to buy a Tesla vehicle.
The TeslaCarecard will be added to Tesla’s network in the coming weeks, the automaker said.
Tesla is expected to unveil its Tesla Care credit card at a press conference later this month.