“We don’t buy advertising,” tweeted Tesla chief executive officer Elon Musk in 2019. Note the wording – he doesn’t “buy” it, he earns it. And that’s how Tesla became the biggest electric vehicle (EV) brand in (and out of) the world. The Drum investigates as part of its latest Deep Dive, Marketing Secrets of Fast-Growth Brands.
Elon Musk. Innovator or idiot? Saint or sinner? Savior or just another billionaire? This duality is reflected in another tumultuous week of coverage that reached new lows with a racism lawsuit in California and new highs with his $5.74bn charity donation in 2021.
This man, this mystery, has tasked himself with saving the planet while retaining juvenile (or playful) behavior, like smoking a doobie on the Joe Rogan podcast and accusing a man saving children trapped in a cave of being a pedophile. Musk has ridden the rhetoric to become the richest man in history with a net worth of around $271bn.
How many more chief execs, never mind auto ones, can you name?
Musk has a history of entrepreneurship, forming PayPal and then SpaceX in 2002 before joining (not founding) Tesla in 2004. The list goes on to include the Solar City battery firm. But as chief executive of Tesla, Musk greedily cultivated regular column inches with almost every act and came to lead a loyal cult.
And that brings us back to Tesla, which was recognized as the fastest-growing brand of 2021 by Interbrand.
Understanding Tesla’s growth
There are three key component parts that are driving Tesla’s brand value, according to Daniel Binns, chief executive officer of Interbrand. “Tesla’s financial performance is clearly going from strength to strength, with the company hitting a $1tn market valuation last year. But, most importantly, it is the role the brand plays in driving customer decision making and the strength of the brand, which is only getting stronger.”
It benefits from “clarity of purpose and authenticity – the ambition of ‘saving humanity’ resonates now more than ever.” Binns goes as far as to claim Tesla “is the poster child of a perfect purpose-led business.”
He adds: “There is no defacto ‘marketing person’ at Tesla – it all comes from Musk, the same way that Steve Jobs drove much of the marketing thinking with Apple.”
Tesla sells vehicles faster than it can produce them and there’s a pent-up demand as the combustion engine chugs to a timely stop. It sold almost 1m cars in 2021 – up 87%. BMW hit a decade low that year at 8.9m deliveries. By 2030, about 24% of new vehicles sold worldwide are likely to be fully electric, according to forecasts from Alix Partners. How many will be Teslas?
The answer to that is, how many can Tesla produce?
The recently-released Forrester Brand Spotlight report says: “Tesla and its tempestuous leader Elon Musk have reshaped the automotive category.” A notable moment was when Hertz ordered 100,000 vehicles. And Pepsi has put in a substantial order too. Brands, as well as people, want to be associated with it.
According to Kantar’s Brand Z list, Tesla has the greatest annual growth in brand value – an astounding 275% compared to an automotive category growth of 33%. “Tesla’s remarkable success derives from many factors – breakthrough innovation, charismatic albeit polarizing leadership, totemic appeal,” and it adds the fact that people feel like they are buying into progress.
But how was all this achieved without paid advertising?
Running out of charge?
Patrik Lenhart, creative director at R/GA, spent years working with DDB on Team Voltage, Omnicom’s Volkswagen coalition.
He says: “For a long time, the first argument and key feature for EV cars was that they are EV cars. Now that EV become ‘everyday,’ we don’t have to explain EV any more.”
That’s where Tesla’s inherent advantage was, he argues. “Tesla did not need to explain. Manufacturers who pushed into EV coming from ‘combustion’ did. Tesla was never half an EV brand or becoming an EV brand. The rest had to explain why they are late to the party. Tesla was odd, an electric-only car brand before that was a thing.”
Tom Langan, content director at The&Partnership, sees trouble ahead now EVs are normalized.
“For advertising, ‘save the planet – get one of these space-age EVs’ is no longer a compelling message. Marketers should now focus on selling EVs in the same way we market internal combustion engine vehicles; by thinking about audience needs, mating them up with features, and doing it all under an umbrella of desire – making consumers want the car in a way they’ll never want a washing machine.”
He points to client Toyota’s work bringing out an entire range of EV vehicles designed to appeal to every use case, much like the car marketing of before. It’s a point Lenhart also made separately.
But they’ll all be shy of Musk’s “cult of personality … he’s been selling a vision, a story, and formed a club that people want to be a part of.” Langan doesn’t think Tesla’s lead is sustainable due to the realities of production constraints, margins, aftersales operations and long-term customer satisfaction.
Even Tesla isn’t immune to gravity, although you’d be forgiven for thinking overwise. Musk, via Space X, famously shot a Tesla into space, promoting both his EV and space-faring interests at once. Said test cost about $90m, which could likely sustain a decade of Super Bowl ads. The difference is Space X was already engaged in the pricey flight test, and the addition of the roadtest as the payload was a stroke of brilliance that likely had a much smaller cost.
Musk and Tesla are inherently interesting, for their failures as much as their successes. When it launched the Cybertruck Musk smashed the window of the indestructible vehicle. One LinkedIn observer suspected it was staged, and with Musk’s showmanship, he was right to harbor some doubt. Musk also released a flamethrower, a product sold by a group named the Boring Company at the behest of fans. He also seems to irregularly talk about underground transit tunnels. Whether that’s a flawed concept or not (it probably is), he’s positioned as a deep thinker on transit.
It’s all attention, at the end of the day. Tesla’s approach isn’t replicable. One observer on Quora observed how like Trump, Tesla “sucks all of the press away from everybody else in the room. Nice trick!”
Interbrand’s Binns adds points out that the auto industry “has a history of being incredibly indistinct, with many companies too scared to buck the trend.”
For Tesla, the challenge will be in expanding from early adopters to fast followers without losing its authenticity or true purpose.
Musk’s marketing strategy is laid bare in Tesla’s most recent SEC filings. “Historically, we have been able to generate significant media coverage of our company and our products, and we believe we will continue to do so. Such media coverage and word-of-mouth are the current primary drivers of our sales leads and have helped us achieve sales without traditional advertising and at relatively low marketing costs … marketing, promotional and advertising costs were immaterial for the years ended December 31 2020, 2019 and 2018.”
But could that change?
Well, in 2021 Tesla will continue to grow. And Tesla will continue to lose share of the EV market as competitors find firm footing and transition from the ICE. Then Tesla’s advertising war chest will come in handy.
Langan adds: “Much like the big players, Tesla needs to mature into a well-rounded proposition for consumers that have little regard for the hype. If it can shift its position away from appealing to early adopters and toward stealing market share from the big three German brands, it’ll build a sustainable and powerful position in the EV market.”
Issues with trust and reliability could bite in the coming years, according to Binns. He adds: “Look at the Superbowl – the only adverts for cars were for EVs. The competitors are hot on Tesla’s tail.”
Dan Gregson, co-founder of EV publisher Electroheads, brings it back to the trappings of legacy. The competition is belabored with it, “legacy tech, legacy customers, legacy dealerships, legacy business models, legacy shareholders and legacy marketing models.”
If Tesla can avoid the extra weight, and remain aerodynamic, it will flourish… as long as it retains the backing of what Gregson is calling the $TSLA stock bros, Musk’s “army of private armchair investors.”
“They would die for their dear leader – they are a huge army of influencers, not just of brand, but of stock. Those same people are influencing people to buy stock in $TSLA, then something bigger happens – because the earned media value is multiplied massively. And then finally, when you add the effect of Musk into that too, again, you get another factor of multiplication. It all amplifies itself – it’s like a flywheel.”
The flywheel must keep flying, he hints. If Musk moves on – beyond the mortal coil, or to the moon, or for whatever reason into scandal or exile (all equally plausible) – where do the bros look next?
Again, the Apple comparison comes up. Gregson points out that people said the same about Steve Jobs after his passing… and Tim Cook has proven a steady custodian of the tech giant.
For Tesla, analysts would be wise to compare more like-for-like vehicle sales. As Gregson points out, Tesla is “as much a software business as it is a hardware business” (driverless cars anyone?) and it’s also an energy company. He is a Tesla customer but owns a Kia EV – because he charges his vehicle at home using a Tesla PowerWall on his house linked to a solar panel. That business line is thanks to its holdings in Solar City. Even in the early 2000s, Musk was putting the pieces together.
Gregson concludes: “What we can see already in the world of EV is bundling – not only charging but the stuff that comes through the charger, energy. This is where Tesla is already in a different league. It is not just an EV brand – it is an energy brand too.”
This article first appeared in www.thedrum.com
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