University Marketing Assignment: Tesla's Lease and Hailing Service

This report analyzes a news article from the Australian Financial Review discussing Tesla's new marketing strategy involving leasing Model 3 electric sedans to seed a car hailing business. The assignment addresses key issues, including the shift from online ordering to Tesla stores, the implications of the lease-only model, and the potential impact on consumers and investors. The report identifies important stakeholders, such as investors, suppliers, and the board of directors, and examines the marketing implications of the policy, considering both potential positive and negative effects on stakeholders. The analysis suggests that while the strategy might boost initial sales, the lack of an option to purchase the leased vehicle and the car hailing service's competitive landscape could pose long-term challenges. The report concludes by highlighting the potential for confusion and instability in the market due to the changing policies.

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Marketing Assignment
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MARKETINGASSIGNMENT
1. What are the key issues illustrated in the article?
In Australian Financial Review an article titled “Tesla pushes leases to seed
hailing business” was published on 17th April, 2019. The article talks about the
marketing policy Tesla has taken to lease electric sedans of Model 3 first time in their
history. They have made some of these models available for lease the base model that
is priced at $35,000. This policy is not like any other standard auto lease where the
person taking the lease can but the vehicle after the end of the lease term. The lease
Tesla is offering is available against a down payment and a competitive sum of
monthly payments. They are planning to use these leased vehicles in their door-to-
door car service that they will be introducing later on. The CEO of Tesla, Elon Mask
has pitched the idea of Tesla’s new car hailing services several times in the last few
years but no details were shared regarding that. Statistics suggest that luxury car
consumers opt for leased cars in more than 50 percent of the cases rather than buying
the cars (Australian Financial Review, 2019). Earlier the Model 3 base model was
only available through online ordering, that too, became available online not very
long ago. This Model 3 is one of the most affordable cars that Tesla has ever made.
Now, Musk has changed the strategy and made the car available only through Tesla
store. This standard model would not have some features like heated seats as well as
streaming music services and many such though they are upgradable.
2. Who are the important stakeholders?
The stakeholders of Tesla include the board of directors, the investors, the
creditors, the employees, the shareholders, the suppliers and the unions related to the
production. The important stakeholders in these cases are the investors, the suppliers
and the directors. Other important stakeholders are the shareowners of the

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organization. The top shareholder of Tesla is Elon Musk himself. Following him are
Jeffery Straubel and Deepak Ahuja are the next two major stakeholders of Tesla.
3. What are the implications of these issues from the marketing
perspective and how will these impact (positively or negatively) the
stakeholders?
Investors and market analysts believe that the policy taken by Tesla to boost their
Model 3 sale will be short lived. It will increase in the beginning, as several people
will be interested in buying the cars at the first go. Later on, it is likely that it will
soon wane and the demand will decrease gradually. Arndt Ellinghorst, the Evercore
ISI analyst, believe that this change in policy and practices projects the unpredictable
nature and communication on Tesla’s part. The announcement of Tesla of introducing
a ride hailing services will affect their position in the market, as it is less likely that
people will be willing to invest in that. The consumers that will investing much of
their money on leasing a luxurious car will be mostly willing to own the car after their
leasing period, according to the market trends. If that option is not available then
many of the consumers may become unwilling to invest a large sum of money every
month. The stakeholders of Tesla are going to be positively affected due to the
change. The major shareholders are likely to profit as the sale of Model 3 increases.
However, in the long run it is possible that this will affect negatively. The changing
policy communicate confusion and instability in the market. Moreover, the car hailing
business has many competitors and Tesla might have to struggle to gain competitive
advantage in the market.

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References
Australian Financial Review. (2019). Tesla pushes leases to seed ride hailing business.
[online] Available at:
https://www.afr.com/business/media-and-marketing/cmo-brief/tesla-pushes-leases-to-
seed-ride-hailing-business-20190417-p51ewo [Accessed 24 Apr. 2019].