Five Marketing Lessons from Tesla
Elon Musk, Tesla CEO, unveiled the company’s Master Plan, Part Deux yesterday afternoon. Tesla, of course, is a modern-day success story, creating a viable car company when such a thing is foolish. Or as Musk put it: “I thought our chances of success were so low that I didn’t want to risk anyone’s funds in the beginning but my own.”
Luckily for him, he was wrong. With a market cap of over $ 30B and the preferred car supplier of Silicon Valley elite, Tesla has set itself up nicely for the next 20 years as the world attempts to wean itself off fossil fuels and eventually transition fully to automated driving. So how did Tesla do it?
1) Made its own industry. While Tesla obviously competes with traditional car manufacturers, Tesla is the only prominent stand-alone electric car manufacturer. For a person interested in conveying his or her care about the environment, driving a Tesla makes that clear. It’s harder to know whether a Toyota whizzing by is electric or hybrid or full gas guzzler. Also, if you do want an electric car, why would you buy from a company that makes all types of engines, instead of the one that only makes electric?
2) Clearly defined strategy: Since it’s founding, Tesla has had to combat criticism that it only cares about the rich and elites. While that criticism no doubt persists today, it’s not because Tesla has not made its vision clear. In his recent note, Musk restated that he has published on the website since day one.
- Create a low volume car, which would necessarily be expensive
- Use that money to develop a medium volume car at a lower price
- Use that money to create an affordable, high volume car And…
- Provide solar power. No kidding, this has literally been on our website for 10 years.
Musk reiterated the reasoning for this in his Part Deux. The company needed to focus on producing the best car, which took a lot of capital and time, so the price point had to be high originally. Telsa has continually sought to bring the cost down and roll out more affordable cars to the populace. This is tricky on a number of accounts: one, the original purchasers of Tesla cars could lose interest as new, cheaper models are rolled out. And people who could not afford the original models might be turned off by the time an affordable one reaches them. But Tesla’s branding and smart approach made it so that initial owners wanted everyone to have the car and people who could not afford the first version patiently waited for one they could.
3) An inspirational CEO. While Elon clearly has some interesting ideas (such as, we’re all living in a computer simulation), but he is a well-admired and intelligent CEO. He dabbles in space exploration and is trying to solve high-speed train travel. Even though he wasn’t there for the absolute beginning of Tesla, he is listed as a co-founder and most consider him to be the brainchild of the company. Having a charismatic and aspirational leader can help a company through any tough period.
4) Taking risks. The reality is that the world is not quite ready for autonomous driving. There are legal, moral, philosophical, and practical issues that we – as a people – have not solved. But the technology is mostly there and Tesla – led by Google – is incorporating a lot of that functionality in their cars. Other companies might have disabled the functionality until society had figured everything out, but Tesla is willing to take the risks – both reputational and legal. As Musk put it:
The most important reason is that, when used correctly, it is already significantly safer than a person driving by themselves and it would therefore be morally reprehensible to delay release simply for fear of bad press or some mercantile calculation of legal liability.
5) Innovation. It may be obvious, but it’s true. People inherently want to follow everything Tesla does because they believe every new announcement will be something revelatory or revolutionary. Few brands can guarantee that, and the price of rapt attention through free media is worth millions.