In recent years, Nikola Tesla’ s name has once again caught the public eye. Perhaps now more than ever (which is unfortunate, as he never really got the credit he deserved).
No, they haven’t discovered any of his long-lost prototypes that could change the world as we know it (Tesla already did that once, actually) – it’s literally his name that has been in the spotlight lately.
All thanks to Elon Musk, the CEO of Tesla Inc., an American automotive and energy company, specializing in electric cars, solar panels, and clean energy. Figuratively speaking, Musk took Tesla’s name and launched it into space (he also literally launched some things into space, but I’ll get into that a bit later).
For those of you who don’t know, Nikola Tesla was a Serbian inventor, scientist, and one of the greatest innovators of all times, known for his enormous contributions in the areas of electricity, radio, and robotics.
Exactly innovation is the characteristic shared by both Nikola Tesla and Elon Musk. As Musk’s innovation is something you can read about all over the internet, here I’m going to focus on the Tesla marketing strategy and hopefully pass some of Musk’s marketing genius to you.
Here’s a brief overview of what you’re going to learn in this article:
A Brief History of Tesla
Tesla Inc. was founded as Tesla Motors by Martin Eberhard and Marc Tarpenning, back in 2003.
The decision to start the company was made after General Motors forcibly recalled all of its EV-1 electric cars from customers in 2003 and crushed them in a junkyard.
Elon Musk, the mastermind of Tesla’s enormous success, joined the company’s board of directors in 2004 as a chairman, providing much of the initial capital needed to run it.
Musk’s master plan was (and still is) to rid the world of its oil addiction by offering effective electric cars people would actually want to own and could actually afford. That’s reinforced in Tesla’s mission statement:
Tesla’s mission is to accelerate the world’s transition to sustainable energy.
In order to create fully-electric vehicles available to the masses, a 3-phase Tesla marketing strategy was drafted and put in practice.
The Initial Tesla Business Model
Phase 1: Release a powerful, expensive sports car
Hence, the Tesla Roadster model was born in 2008. It was an expensive sports car with outstanding handling, performance, and long range, which demonstrated what’s possible with EVs. The original model was sold for 4 years, after which period it was discontinued, but a new version has been announced for 2020, at the base price of $200,000.
Phase 2: Release a slightly more practical and more affordable family car
The base price of $200,000 doesn’t really sound like that “affordable vehicle for the masses”, right? But an expensive sports car was the only type of electric car effective in terms of ROI back at the time.
And they needed money for the second phase – a slightly more practical and more affordable (albeit, still expensive) models – Tesla Model S and Tesla Model X.
Phase 3: Release an affordable electric car for the masses
Take the money you earned from the expensive sports car, the somewhat more affordable family car, and invest it into building an even more affordable car – Tesla Model 3. It’s a $30,000-sedan, intended to be sold to the masses.
Such a business model has brought Tesla Motor’s revenue for the year 2017 up to a whopping $11.8 billion. And based on the revenue trends ever since 2008, it’s expected to grow even more significantly in the years to come.
3 Tesla Marketing Strategy Lessons to Learn from Elon Musk
1. Play Hard to Get
It seems like people from Tesla are trying their best not to sell. Let’s say you’ve decided to buy a new Tesla.
Normally, you’d go to a car dealership, listen to a sleazy salesman trying to push you into buying the more expensive version, decide that you still want the more affordable one, take it out for a test spin, haggle about the price, and eventually walk out with the keys to your new car. Right?
Not if you’re buying a Tesla. There are only a few slight problems with the abovementioned approach:
1. There are no Tesla dealerships.
2. As a consequence, there are no sleazy salesmen.
3. The price is the price, there’s no negotiation.
4. You need to make a $5,000 deposit to book a test drive.
5. In most cases, however, you don’t even get to see the car before you buy it!
6. You may have to wait for months before you get your hands on your Tesla.
Of course, this aspect of the Tesla marketing strategy is only a marketing strategy to a small extent. The other reason for so many “obstacles” when trying to buy a Tesla car is the scarcity or the lack of a more serious mass production.
Musk himself explains this:
“With a small amount of effort we can easily drive the Model 3 reservation number to something much higher but there’s no point. It’s like if you’re a restaurant and you’re serving hamburgers and there’s like an hour and a half wait for hamburgers do you really want to encourage more people to order more hamburgers?”
However, as the latest data shows, Tesla has more than doubled the number of vehicles delivered worldwide in the 3rd quarter of 2018 (83,500 units) compared to the previous quarter (40,740 units).
If the vehicle production trends continue to increase, however, people from Tesla will probably have to rethink their “no investments in marketing” strategy. But for now on, they are still selling more than they’re producing.
2. $0 Tesla Marketing Strategy – Myth or Reality?
Can you think of a Tesla ad you’ve seen most recently? I couldn’t, either. So, I googled. Apart from several surprisingly high-quality fan-made ads, there seem to be no official ads for Tesla cars up to this date.
Of course, there’s a simple explanation behind the alleged absence of a more meaningful Tesla marketing strategy. As Tesla CEO stressed in a recent interview, they’re not investing much in marketing their latest Model 3. The reason is as follows:
“We’re not promoting the car,” Musk said. “If you go to our stores, we don’t even want to talk about it, really, because we want to talk about the thing that we can supply. If somebody orders a Model 3 now, it’s probably late next-year before they get it.”
So, Tesla doesn’t invest in paid advertising because… they don’t need to. At least not at the moment. The ad spending per vehicle sold chart below shows that Tesla spends $0 on paid advertising.
But does that mean they spend $0 on marketing? Of course not.
In fact, in February 2018, they performed one of the most expensive publicity stunts in the history of marketing.
Tesla: A Space Odyssey
Sure, it was done under the veil of the SpaceX launch, but still, it’s Tesla advertising 101.
SpaceX is Musk’s aerospace company, which he founded prior to joining Tesla. In February 2018, they launched their Falcon Heavy rocket from the Kennedy Space Center.
Still, plain spaceships are plain boring. At least to Elon Musk they are. That’s why his SpaceX ship was seen cruising the orbit to the tune of David Bowie’s Space Oddity while carrying a Starman in a Tesla Roadster.
Not just any Tesla Roadster – the Tesla Roadster Musk bought for himself (paradoxically – from himself) back in 2009.
“There’s a starman waiting in the sky
He’d like to come and meet us
But he thinks he’d blow our minds…”
David Bowie’s lyrics predicted it decades ago, Musk made it possible in 2018, while the rest of us are still recovering from having our minds blown. Behold the Starman:
Be that as it may, it’s not like a part of this SpaceX campaign wasn’t to increase the brand awareness around Tesla. And it certainly did cost a substantial amount of money.
Still, the “not spending any money on marketing” story is great marketing itself. It may be true that they do not spend money on traditional ads, but still, it’s undeniable that Tesla invests significant sums into their marketing strategy.
3. Elon Musk a.k.a. the Social Media CEO
If we bear in mind that 95% of car buyers research cars online before they buy, it makes perfect sense – you need to be where your target audience is.
The graph below shows the total number of mentions across social media channels for most of the world’s most famous car brands. As you can see, Tesla in number 3 at the moment, threatening to overtake BMW some time soon.
The next chart shows the percentage of the social discussion on the subject of electric vehicles:
The secret to Tesla’s huge popularity on social media? Elon Musk.
Many CEOs are still somewhat reluctant when it comes to using social media. I guess that’s because they have to be extremely careful about what they’re posting in order to avoid public shame, damaging the brand’s reputation, or even lawsuits.
Many CEOs, but not Elon Musk. In fact, one might say that his public popularity has contributed to the company and the brand more than any money they (didn’t) spend on marketing. When it comes to CEOs on social media, only Bill Gates’ 46 million followers significantly top Musk’s 23.2 million on Twitter, but it’s not just a game of numbers.
The thing about Musk is that he just loves to get personal on social media.
Tweeting about the newest business ideas on the drive home, complaining about Twitter locking his account, live broadcasting rocket launches – you name it, Musk tweets about it. He sure doesn’t restrain from speaking what’s on his mind at any given moment, unlike other CEOs who use social media only to share dull corporate updates and products info.
What can you learn from this aspect of the Tesla marketing strategy? Tie a face to your brand, take a bit more personal approach, engage with your audience, and it could be all the marketing you’ll ever need.
Another rather obvious piece of advice (so obvious that I didn’t think it deserved a section in this article) is to innovate. Tesla does it. Apple does it. To own a successful business in 2018, you need to be doing it too.