Luxury electric automaker Tesla looks like it might be in for some mounting competition in the next few years and is currently taking steps to secure a solid defense. On the heels of the Tesla D announcement, the company is now taking extra steps to ensure that its cars remain affordable for prospective customers by improving the leasing options available.
Tesla has partnered with US Bank to ease monthly lease payments on its Model S by as much as 25 percent. Not only that, but the company is also tacking on a “Tesla happiness guarantee,” which means that if you discover that the Model S isn’t living up to your expectations for any reason, you can bring it back and be released from your lease commitments. “The only catch is that you can’t then immediately lease another Model S,” CEO Elon Musk wrote in a press release. “Upgrading early is no problem if you want to do that, but there is a pass-through fee to cover the new vs used value difference.”
The move is another in a long sequence by Musk, who has taken the luxury and electric car market by storm over the past few years. While Tesla cars have been out of reach for many consumers due to their relatively high price, a different leasing approach may be key in attracting new customers. Another way to bring in new clientele is to offer more options, which the company is also set to do. By revamping the Model S and expanding with new models on the horizon, Musk appears to be setting his company up for a long-term engagement with the world’s incumbent luxury automakers.
Some of those luxury automakers — Porsche, Audi, and Mercedes — look primed to meet Tesla head on sooner rather than later. All three companies have disclosed plans to create electric vehicles that will rival Tesla’s Model S, according to ArsTechnica, which itself cites interviews from a German publication called Manager Magazine.
On the Porsche front, it appears that the German automaker will be going up against Tesla with an all-electric new model, which is currently in development. Autocar reports that sources are saying the new model will fit into Porsche’s lineup beneath the ever-popular Panamera model, which has already been built with a hybrid-electric engine of its own. Details are scant so far, but it seems that there are enough people in the loop to confirm that Porsche is actually going through with it.
Audi is also on the offensive, with the announcement of the Q8 e-tron all-electric SUV, which is set to take on Tesla’s Model X CUV, due to hit the market within the next year or two. Green Car Reports says that Audi is putting a greater emphasis on hybrid and electric vehicles because the company’s brass feels that the market, particularly in European population centers, is headed toward a zero-emissions future. If that is the case, perhaps the Q8 e-tron is merely the first step in a whole range of electric vehicles?
As for Mercedes-Benz, ArsTechnica reports that a planned sedan that will rival the Model S is still quite a ways out on the timeline, with a projected date of 2021 in mind. Redesigning current models in order to incorporate a larger battery appears to be the genesis of the issue, but if Tesla continues to pick up steam — and steal valuable market share in the luxury segment away from Mercedes — don’t be surprised if that project ends up on the fast track to completion well before 2021.
With competitors hot on its heels, Tesla could also be facing other issues on the horizon, namely a building secondhand market for the company’s vehicles. Since Tesla is very new to the market, there hasn’t really been a chance for interested buyers to look for a used Model S. But as time marches on and the company announces new and upgraded models, current Tesla owners may be looking to replace the cars they have with recent additions to the market.
In order to keep people from purchasing pre-owned Tesla models, perhaps retooling the company’s leasing strategy is a way of making a new purchase or lease just as attractive as a lower-priced alternative? Of course, Tesla’s vice president of communications, Simon Sproule, has confirmed that the company will be putting together a used sales program of its own in what appears to be an attempt to dip into the secondhand market, as well.
“With the Model S fleet now heading toward the first cars hitting three years old,” Sproule wrote in an email to Automotive News. “We are looking at CPO and how best to structure.”
With the new leasing options, a plan to get its fingers into the used segment, and a few new models and upgrades in the pipeline, it’s fair to say that Tesla has officially worn out its welcome and is gearing up for the response from the world’s big luxury automakers. As Sproule said previously, the company’s vehicles have been on the market for a few years now, and in that time have been able to capture significant market share. Well, maybe not a lot, but enough to give the industry as a whole a jolt and force companies like BMW, Mercedes, and Porsche to address their needs for all-electric rivals.
As these other companies jump on board with all-electric luxury competitors, it’s making Tesla compete, too, which is good news for consumers. The updated leasing options appear to be one of the first steps in broadening the company’s customer base.
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