Tesla did great work in popularizing electric vehicles. For a long time, only golf players and ardent environmentalists were using electric cars. At that time the only advantage of electric cars was their eco-friendliness. If we speak about their speed, acceleration & other technical aspects, electric cars couldn’t compete with petrol or gasoline-powered automobiles.
Nevertheless, there were no such fundamental contradictions in science and business that could prevent the rise of electric cars mass consumption. Someone just should have combined the available technologies. Fortunately, there were people who could do it.
The Origin Of The Idea
Tesla’s success is based on two people – engineers Mark Tarpenning and Martin Eberhard. Both professionals have deeply researched the market to find a sphere where advanced electronic batteries can be used. Eventually, Eberhard and Tarpenning decided to create a car with an asynchronous motor and a lithium-ion battery.
The use of an asynchronous engine immediately eliminates many classic car’s parts: a driveshaft, bulky engine, exhaust system, gas tank, and so on. By and large, an electric vehicle with such an engine needs a battery, electric motors for the main wheels, a cooling, and control system. However, on the way to the final version, Eberhard and Tarpenning faced several problems.
During the business presentation, they offered investors something unreal: a fast and productive electric car. Initially, they managed to collect some funds from relatives and small investors. Nevertheless, they needed more money. That was the time when HE came up to the stage.
Tarpenning and Eberhard saw Elon Musk giving a speech at Stanford back in 2001. By 2004, Musk sold PayPal, became a millionaire and founded his own SpaceX company. Eberhard and Ian Wright agreed to meet Musk in SpaceX headquarters, Los Angeles.
At the start of works, there were disagreements about the future of the project. Initially, Musk was strongly doubting about his investments. However, in some things Musk and Tesla engineers were unanimous: the electric car should be powerful, beautiful, not just a little better, but become a breakthrough and bury gasoline. Finally, Musk agreed to invest $7.5 million.
The development of the first Tesla Roadster was very difficult. All possible terms weren’t met. Musk continued to invest in the project and by 2008, despite all the production problems, the company managed to release the first batch of cars.
Further IPO, the attraction of Hollywood stars and constant improvements have turned the company into the automotive giant.
Tesla Sales Model
Tesla’s sales strategy significantly differs from the approach of traditional manufacturers – Ford, Fiat Chrysler, General Motors, etc. The company has no dealer network.
Tesla attracts consumers through the next three channels:
- Test drives;
- Online sales;
- The company’s own stores.
Elon Musk explained their sales strategy: “There is a fundamental conflict of interest between sales of high-tech electric cars and gasoline-powered cars, which determine sales of existing dealers.” Therefore, the company sells its cars in the online store and in more than 20 points of sales around the world.
The main problem of the Tesla sales model is the high cost of maintaining its own network. Moreover, despite the investments, it’s difficult for them to compete with already existing dealer networks. Nevertheless, such an approach has positive sides. For example, Tesla controls the implementation of its marketing strategy.
Paul J. D’Arcy, an American entrepreneur, highlighted other peculiarities of the Tesla sales model:
- There are no vehicles in stores, Tesla cars are made to order;
- The price is fixed and the company doesn’t offer any discounts;
- In some states, clients can’t test a car;
- To get a car, you need to wait a few months.
According to Tesla, the salary of their sales managers doesn’t depend on the volume of sales. Therefore, they don’t have the sole purpose of selling a car, like that of a regular network employee. Musk says that the company deliberately acts this way to emphasize the difference between electric and petrol cars.
Tesla Digital Marketing
According to D’Arcy, the company focuses on online communication with their customers. He claims that Tesla initially made the company’s forum a key communication channel. The company encourages car owners to chat on the Tesla club website.
Tesla publishes numerous product presentation videos, posts on the importance of the clean environment and shots test-drives. In 2016, the company presented the Tesla autopilot system. In that video, the car drives several streets on its own, stops before the corner and parks after the driver leaves the cabin.
Elon Musk, the head of the company, constantly shares videos and news about the Tesla development on his Twitter.
According to Codesign, Tesla is positioning itself as the company of the future. The production of electric cars is not the only confirmation of such positioning. Other Musk’s projects also do great work forming the brand. Tesla cars are organically integrated into the infrastructure formed by the Solar Roof and PowerWall energy storages.
Tesla holds PR-activity, which show the technological side of the company. Periodically, it receives automotive industry awards. In 2012, Yahoo Auto recognized Tesla Model S as the car of the year.
D’Arcy noticed that the Tesla service centers have white floors. In his opinion, it emphasizes the positioning of electric cars, which are opposed to fuel machines. They, unlike electric vehicles, can leave dirty marks of liquid on the floor.
Tesla Service Center
Tesla managed to turn into a disadvantage the traditional advantage of the luxury car market – these are complex technologies that stand behind their production. Tesla, on the contrary, focuses on the simplicity of its platform.
D’Arcy compared the positioning of Apple and Tesla: “These are Apple computers in the automotive industry. Both companies offered a product that was significantly different from what they had been offered on the market before. Both companies are focused on innovation. Both companies are building their own ecosystem. Both companies retreated from the traditional sales model, developing their own distribution network. Tesla even hired Apple’s manager for the development of its stores.”
Personal Brand Of Elon Musk
Tesla often uses the earned resources for its marketing, not the paid or owned ones. Elon Musk often does something that deserves press coverage starting from posting memes on Twitter to smoking weed during his interview. Musk’s personal brand attracts lots of attention to Tesla.
Innovative ideas, unique sales and digital marketing strategy make Tesla an extremely successful brand. We shouldn’t also diminish the Elon’s role in Tesla’s popularity. He’s a charismatic entrepreneur and visioner, who communicates a lot on social media. Sometimes he goes too far with his performances which lead to Tesla stock devaluation. Nevertheless, it helps his brand to be at the top of the media hype.