Tesla’s current state and brand potential. How to derive a brand meaning and create a future that inspires


Textbook, 2021

101 Pages


Excerpt


Table of Contents

List of figures

1 Introduction

2 The rocky road of Electric Vehicles

3 History of Tesla - A journey against all odds

4 How Tesla managed to build a legendary brand from scratch?

5 The economics of TeslaTesla nomics

6 The uncommon brand identity of Tesla
6.1 Twitter
6.2 Instagram
6.3 Facebook
6.4 Youtube

7 The Tesla Car – a product that transforms into a brand experience
7.1 Product
7.2 Place
7.3 Price
7.4 Promotion

8 Tesla SWOT Analysis and key takeaways
8.1 Strengths
8.2 Weaknesses
8.3 Opportunities
8.4 Threats

9 Tesla potential brand extension project

10 Conclusion

Reference List

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Copyright © ScienceFactory 2020

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List of figures

Figure 1: HENNEY KILOWATT: The American Electric Dauphine, (Renault Group 2014)

Figure 2: A look at the 1966 Chevrolet Electrovair II concept, (Raw When Parked 2014)

Figure 3: The story of Enfield Neorio 8000, (Neo Kosmos 2018)

Figure 4: Comuta Car 1974, (High Science n.d.)

Figure 5: Zagatp Elcar 1974, (Dailymail, 2017)

Figure 6: Lada 2801 1980, (English Russia n.d.)

Figure 7: GM EV-1 1996, (General Motors Heritage Center n.d.)

Figure 8: Tesla Model S 2012 Interior (Black Tie Stiletto Blog 2011)

Figure 9: Brand Mythology System (Vincent, 2002)

Figure 10: Tesla Net Income Ycharts viewed 11 April 2020

Figure 11: Elon Musk social media post, Twitter October 2019

Figure 12: NASDAQ, TSLA Stock viewed 11 April 2020 (source: Tradingview.com)

Figure 13: Tesla Gross Profit Margin Ycharts viewed 11 April 2020

Figure 14: Tesla Sales Quarterly Clean Technica 2019

Figure 15: Elon Musk Twitter account

Figure 16: Elon Musk Twitter account

Figure 17: Elon Musk re-opened Instagram account 2020

Figure 18: Elon Musk Instagram account 2018

Figure 19: Tesla Instagram 2020

Figure 20: Elon Musk Twitter 2018

Figure 21: Tesla Pet mode, Instagram 2020

Figure 22: Autolist Survey 2019

Figure 23: Sentry mode, Instagram 2020

Figure 24: The electric cars that will get you the furthest, Statista 2019

Figure 25: Motor Vehicle Registration and Number of Horses and Mules in the US, Ark Investment

Figure 26: Mockup Twatch promotional image

1 Introduction

“Most narrative is part purpose, part accident, and the messiness of life always pulses against the myth.” Anne Gisleson, The Futilitarians: Our Year of Thinking, Drinking, Grieving, and Reading The industrial revolution made an enormous number of people move to bigger cities, especially in Great Britain. In the 1890s the main transportation mode was horses. As the population was urbanizing more people meant more horses, which in terms meant more biological waste. The London city planners forecasted that in 50 years the whole urban area will be covered in almost 3 meters of manure also known as “the great manure crisis of 1894” (Davies 2004). The one thing that no one could forecast was that new technology would completely destroy those concerns – motor vehicles. This technology managed to solve a problem that in the current paradigm of thinking was unsolvable. One of the biggest global issues that we as a human race have in the 21st century is undoubtedly climate change. Most probably, the technology is our only hope for solving or at least mitigating this pressing life-threatening concern.

Since the creation of the first gas-powered car from Karl Benz in 1885 (Daimler n.d.) the technology has brought an enormous utility and prosperity for the entire humanity. From then on, till the mass adoption in the late 20th century the humankind has been living on borrowed time. We simply changed one transportation problem with another much better and more sophisticated but still a problem that affects our environment – the gasoline cars. One company tried to challenge the status quo and create a new technology that would help the environment. Not only that but it shifted a paradigm that has been pervasive for more than a century – that the gasoline cars have no viable alternative. For its short-lived 17 years history, this company created a worldwide renowned brand that has already achieved legendary status. That company is Tesla.

The goal of this master thesis is to analyze in depth how a new business venture can create a brand that would be able to sustain, fight and in often cases win against established competition. In addition, it will inspect what are the key fragments of a legendary brand in the framework created by Vincent Laurence and how it is linked to our underlying human psychology.

The brand is audited from different perspectives, including macroeconomic analysis and SWOT analysis and concluding with validation of its initial hypothesis – the legendary brand status that Tesla has achieved in its brief history of 17 years. Finally, a proposal brand extension will be presented as a future potential path that the company could explore.

2 The rocky road of Electric Vehicles

Many people believe that electric cars are an eccentric novelty that is being sought out by eco-activists or rich consumers wanting to show off. Even though this might be the case for a number of consumers, the idea for their creation and usage goes way back in history. Electric vehicles have been around for quite some time and the earliest ones date as early as the first half of the 19th century (US Department of Energy n.d.). In essence, there were electric vehicles almost as long as there were cars in general. Not only that but in the dawn of the transportation revolution of the beginning of the 20th century, they were actually outpacing the combustion engine cars in terms of technology and innovation, breaking the land speed record of the astounding at the time 100km/h (Van den Bossche 2010). The cheap price of petrol and the additional range that the ICU (internal combustion engine) cars provided, however, drown the stimulus for the further development of the technology for decades.

Aside from all the external factors that stifled the innovation of the technology, electric vehicles also had an image issue. No major car manufacturer saw potential in changing that. Throughout the 20th century, EVs were a synonym of inadequate and weird-looking products that would never be able to compete with the internal combustion engine cars. Their lack of commercial and marketing success was in a symbiotic toxic relationship.

No meaningful progress has been made until the release of Henney Kilowatt in 1959 (Renault Group 2014). With a Renault Group partnership, the project was funded by the National Union Electric company a conglomerate including Emerson Radio, and Henney Motor Company. They also produced car batteries and wanted to combine those two technologies and find new ways of using them. Surprisingly, the range of the 1960 model was not tragic – around 75 kilometers with a top speed up to 97 km/h (Theobald 2004). The marketing of the car was unimpressive. The accent was that the car was electric but there was no explanation of why this might be better in comparison to the traditional cars or how this could benefit the consumer. In the 60s there were no pressing environmental concerns and the battery technology was underdeveloped. Naturally, the initiative was far from being a commercial success. Simply advertising that the car is electric was not good enough. Being different certainly not meant better in this case. Out of the 100 cars that were built only 47 were sold. Most of the buyers were electric utility companies, not regular consumers. In the coming years, the funding stopped as Henney Motor Company was not able to produce batteries at the planned price.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: HENNEY KILOWATT: The American Electric Dauphine, (Renault Group 2014)

In 1966, General Motors introduced its Electrovair II (Sabatini 2010). The rationale was not saving on petrol but rather helping with the air pollution that was becoming a big issue, especially in the enormous metropolitan areas such as New York (Dwyer 2017). The car never saw the light of day and was not commercially produced but rather an interesting concept trying to make use of the newly discovered silver-zinc batteries by NASA (DiCicco 2016). Unfortunately, the car did not have virtually any advantage to its gasoline counterpart that it was based on. The Electrovair II was heavier, the batteries were expensive and bulky. Furthermore, they only lasted around a hundred charges and took 6 hours to recharge.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: A look at the 1966 Chevrolet Electrovair II concept, (Raw When Parked 2014)

The 1973 oil crisis shifted the focus from air pollution to fuel saving. The world reliance on petrol was astounding and over a couple of months, the price quadrupled (Williams 2011). There was an external factor that was pressuring the automakers to look for alternatives. At the time a British carmaker called Enfield Automotive released its 2nd generation of a mini electric car called Enfield 8000 trying to take advantage of the situation (Papas 2018). It was a small two-seated vehicle that made it a good city car but nothing more. The technical specifications were far from impressive with a maximum range of 64 kilometers at a top speed of 77km/h (Flux Capacitator n.d.). The car was tiny and unappealing even by the 1970s standards. There were virtually no marketing efforts other than the hype that the car was electric. With high hopes of starting an electric revolution, the actual production number came to a disappointing total of 120.

Abbildung in dieser Leseprobe nicht enthalten

Figure 3: The story of Enfield Neorio 8000, (Neo Kosmos 2018)

Abbildung in dieser Leseprobe nicht enthalten

Figure 4: Comuta Car 1974, (High Science n.d.)

Abbildung in dieser Leseprobe nicht enthalten

Figure 5: Zagatp Elcar 1974, (Dailymail, 2017)

A common theme across the EV was already being established. Nearly all of the new models were clunky, inadequate, and utterly unappealing Lego-like looking cars. Moreover, the sales were pitiful and the mass adoption virtually non-existent. Simply put, nobody was able to convince the public that there is a future in the vision for EVs.

The 80s were marked by the idea of converting already successful models into EVs. Even the USSR tried to convert its VAZ 2101 (also known as Zhiguli) into a nickel-zinc run electric vehicle (English Russia n.d.). The concept VAZ 2801, of course, turned out to be utterly impractical for the vast territories of the Soviet Union with its 110 km range. The event on which the car was supposed to be revealed was the 1989 Olympic games in Moscow. The reveal to the world never came to fruition and all the marketing efforts were abandoned. Only 50 cars were ever produced before the whole project was scraped out (Big Car 2019).

Abbildung in dieser Leseprobe nicht enthalten

Figure 6: Lada 2801 1980, (English Russia n.d.)

The catalyst for change and actually producing a mass-market EV came from the regulators from the state of California. With the introduction of the ZEV (Zero-Emissions Vehicle Program) in the 1990s tackling the air pollution that was ramping up. The legislation required each major car manufacturer to produce at least a 2% Zero-emission vehicle by 1998, increasing to 5% by 2001 and 10% from 2003 onwards. (California Air Resource Board n.d.)

The big surprise came from no other than General Motors. The Detroit based manufacturer is definitely not known for its eco-friendliness throughout history but apparently saw enough potential to introduce the first mass-market fully electric vehicle released in 1996 - GM EV1. The car was actually decent: the looks were pleasing; the chassis was aluminum based with plastic body panels and super-light magnesium alloy wheels. The range was around 80 miles, the acceleration from 0-100 - 9 seconds with the whopping top speed of 295 km/h (Brown 2016). For a moment, it seemed like this might be a new era in the automotive industry.

It is safe to assume that General Motors were torn by internal clashes about the viability of the whole zero-emission project. Firstly, it introduced the car only in Los Angeles, California, and Tuscon, Arizona, which showed a lack of confidence in the initiative. Then, in a press conference, the company was quick to announce the advantages of an electric vehicle: low maintenance cost and home charging for less than 3 hours (Who Killed the Electric Car? 2006). It was marketed as an innovative practical car, spending around 8 million dollars on an advertising campaign (LA Times 1996) that included an appealing TV ad that was even nominated for an Emmy award (Emmy Awards 1997). This was the first time that an electric vehicle actually had a chance in competing both from a product and a marketing perspective. But how can a project succeed when even the creator does not believe in its own vision? Furthermore, the whole reason for the existence of the entire program was not based on beliefs or a strong mission but on forced external factors.

Abbildung in dieser Leseprobe nicht enthalten

Figure 7: GM EV-1 1996, (General Motors Heritage Center n.d.)

Even with the introduction of the 2nd generation iteration of the model including the new light-weight nickel-metal hydride battery, it was becoming clear that General Motors were giving up on the entire project:

“The auto industry, and that includes GM, sees no future in battery-powered cars…" "…Battery-powered cars are a technology whose time has come and gone," estimating the car cost his company "north of $1 billion" to develop and would cost each driver more than $120,000 if the leases reflected "the true cost of manufacture." - Donn Walker, a GM spokesman (SF Gate 2002)

At the end of 2003, GM officially pulled the plug off the program. The first mass-produced electric car to be openly available to consumers was officially dead. The numerous pleads by the small but loyal community of owners fell on deaf ears.

For more than a century virtually no car manufacturer managed to make electric vehicles a viable and appealing alternative to the masses. At best all the efforts could be considered as a worthy but doomed cause, at worst – a complete commercial disaster. Furthermore, the entire connotation of what an electric vehicle is was extremely tainted by the multiple design and marketing initiative failures. Many companies that have tried to introduce the technology were in the graveyard. There was a need for a paradigm shift and a completely new approach to the consumer. All of the listed failures and many more points out to one simple conclusion – building an electric vehicle at a scale that makes an economic sense is extremely difficult. Furthermore, creating a brand from scratch that produces only electric vehicles would be next to impossible.

3 History of Tesla - A journey against all odds

Many people believe that Tesla was started by Elon Musk. The synergy between him and the company is undeniable. After all, he is a visionary that appears to be having an unstoppable flow of ideas, a media celebrity, a lovable nerdy genius, an almighty CEO, and much more. However, the seed of the Tesla brand was planted much earlier than his involvement and it did not always look so shiny and promising.

It all started with an exceptional engineer called Jeffrey Brian Straubel. At the young age of 13, he found an old golf cart, brought it back home, and restored it to its former glory, which included rebuilding the electric motor. In 1994, Straubel enrolled in the physics department of Stanford University, which he did not find stimulating enough because it was too theoretical, so he decided to mix it up with other majors and creating his own unique program that was called “energy systems and engineering”. (People Pill n.d.)

In the mid-nineties, not many companies were interested in developing electric vehicles. However, there was still a small community of startup engineers and enthusiasts that were tinkering with the idea of making use of solar power and batteries. Straubel hunted down those people and with some of their help decided to buy an old Porsche and convert it to EV in his garage. The car broke the 400 meters speed record for electric cars. There was one underlying problem as Straubel put it: “The thing I took away was that the electronics were great, and you could get acceleration on a shoestring budget, but the batteries sucked” (Vance 2015).The idea stuck with Straubel for years. He was not trying to start a car company or create an iconic brand but actually trying to create a proof of concept car that would make the public think about the potential of the new mass adoption of lithium-ion batteries. He was desperately looking for investors that would support his vision until he met Elon Musk.

“Everyone else had told me I was nuts, but Elon loved the idea.” “He said, ‘Sure, I will give you some money.’” - E.B. Straubal (Vance, A 2015)

After the meeting, Straubal contacted a small company he managed to build a relationship with called – AC Propulsion in order to accelerate his ideas and make them a reality. They have already built some prototypes but lacked the business savviness needed to create an actual working and profitable company. At that point, they were more like a startup of enthusiasts working at a hobby shop. Nonetheless, they have built the controller of the infamous GM - EV1 and had technical know-how (Pressman 2016). If Tesla was the new unborn cool kid of the block, AC Propulsion was definitely its father.

At around that time another exceptional engineer, called Martin Eberhard, contacted AC Propulsion with a technical spec sheet having a similar vision to that of Musk and Straubal. Eberhard and his partner Marc Tarpenning laid the foundation and figured out that there was a market for fast and luxury cars that would be a new-found status symbol for the rich. This was supposed to be their niche target market that would help them build the company from the ground up. The Silicon Valley has an extreme wealth concentration, so if they could create a vision for their product as planned, it could actually work. On the 1st of July 2003, both of them founded their new venture – Tesla Motors. (Schreiber & Gregersen 2013).They wanted to pay gratitude to the inventor that has envisioned and built an exceptional electric motor a century ago. Echoing from the past Nikola’s Tesla story can be summed up as tragic but also worthy and even mythical.

After receiving countless funding rejections and constantly being reminded that the last successful car manufacturer at scale was Chrysler founded back in 1925, they finally met Elon Musk. He became the lead investor and a chairman of the company. Musk called Straubel to meet the team of the newly found company and hired him on the spot. The core of Tesla was built then and there. Tesla had no technical expertise or know-how on how to build a car, absolutely zero manufacturing knowledge but one key realization that lithium-ion batteries are actually becoming quite good. In a typical Silicon Valley startup style – they hired young and ambitious engineers, some of them – directly out of college. The only thing that was keeping the company afloat was a strong vision, unmatched enthusiasm, and the fast-burning initial funding from Musk (McFadden 2019). The initial plan was simple. Take the AC electric motor from AC Propulsion and combine it with an extremely light-weight body manufactured by Lotus. Their prototype called EP1 stirred up the pot. The investors were so impressed with the car that they ignore “minor” hiccups like the fact that the car had to be manually cooled down by fans after some of the test drives (Vance 2015). In July 2006, Tesla introduced to the world their 2nd red prototype EP2. It was a sexy convertible two-seater that managed to go from 0-100 km/h in under 4 seconds. In the initial introductions were present the governor at the time Arnold Schwarzenegger as well as Disney’s CEO Michael Eisner. Later, the official name of the model was announced – Tesla Roadster.

“The vehicles were so fragile that only Straubel and a couple of other trusted hands knew how to run them, and they were swapped out every five minutes to avoid overheating.” (Vance 2015)

Even today we can find on Tesla’s webpage the initial plan that Strauber and Musk crafted: “So, in short, the master plan is: Build a sports car Use that money to build an affordable car Use that money to build an even more affordable car While doing above, also provide zero emission electric power generation options Don't tell anyone.” - The Secret Tesla Motors Master Plan, (Musk 2006)

In addition, the marketing plan of Tesla at the time was quite simple as well – show up to the most well-known events in Silicon Valley and hoping for the best. The hype in the local rich communities was immense. The media picked up the story of this young entrepreneur, with a weird name, coming from South Africa and building an electric sports car and the public was finally intrigued about EVs.

The initial free exposure continues to this day and it is one of the strongest assets as well as biggest liabilities depending on the time period. Before knowing it, they were getting $100 000 dollar pre-orders from celebrities, venture capitalists, and tech enthusiasts. The only car manufacturers that could get away with a business model like that were at the rank of Ferrari, Bugatti, and Lamborghini that were focused on the so-called supercar market segment. Millions kept pouring in the company. The first truly enticing and exciting electric vehicle was the new status symbol of the day, especially in the environmentally-conscious California state. Tesla hit an untapped market that waited for a car that not only had performance and looks but also conveyed a message just by owning it.

An innovation philosophy was starting to emerge at Tesla. The status quo was not binding them on how things must be done. After all, they were not a traditional car manufacturer but a Silicon Valley startup and did things in their own unique way.

A notable example is a time when they had to test the Roadster to cold temperatures. The traditional car manufacturers used a specially designed ice chamber that was extremely expensive, the engineers from Tesla – hired an ice truck and put the Roadster in it and tested it out for a fraction of the cost.

“The company would pick a plan of attack, and when it failed at something, it failed fast and then tried a new approach.” (Vance 2015)

With 50 million dollars in the bank and hundreds of pre-orders secured, Tesla had to figure out how to build the Roadster at a scale. A task that was unaccomplished by nearly all of the previous attempts from other companies and nearly made the company bankrupt. The financial situation of the company was quickly becoming a disaster. The CEO at the time, Eberhard, was quickly falling out of grace. The hectic startup management style and zero financial accountability were going to tank the company just as fast as its meteoritic rise. Not long after demoting Eberhard from being the lead of the company, Elon Musk (chairman at the time) took his place. Their fuse continues to this day (Lemkin 2013). Musk took the wheel of the company enforcing an absolutely ruthless, laser-focused, and result-oriented culture. The engineers at the company were overworked and exhausted wanting a break to which Musk simply replied: “I would tell those people they will get to see their families a lot when we go bankrupt. “ (Vance 2015)

The sweet and nerdy guy that stutters in public settings was called ruthless and tyrannical by the testimonies of many ex-employees of the company. The ethos of Musk that continues to this day was starting to emerge at those early times of his newly found position as a CEO. Whenever people predict his demise, seemingly out of nowhere he manages to pull both himself with even bigger and more ambitious plans.

“We’d have these meetings and take bets on who was going to get bloodied and bruised. If you told him that you made a particular choice because ‘it was the standard way things had always been done,’ he’d kick you out of a meeting fast. He’d say, ‘I never want to hear that phrase again. What we have to do is fucking hard and half-assing things won’t be tolerated.’ He just destroys you and, if you survive, he determines if he can trust you. He has to understand that you’re as crazy as he is.” Vance 2015 Musk’s character and short temper made many of his top engineers quit or were simply fired. The backbone of the company was replaced and many executives were let go. Even with those questionable hiring decisions, Tesla was still able to find talent due to its strong brand image. After all, most young people do want to change the world. According to many testimonies, at that time- the engineers were underpaid, overworked but they still loved their job. The strong mission kept them going. Things were looking up until the financial crisis in 2008. With just 9 million dollars left in the bank and the worst financial crisis since the Great Depression, the future of the company looked doomed. With his other ventures, namely SpaceX (a rocket building company), Musk spent his last money between the companies. By the end of 2008, Tesla was completely running out of cash to continue its operations. (Rosenbaum 2017)

Tesla and Musk have exhausted all options to the point that if things would not turn around quickly, he could end up in jail for spending virtually all investor and client's funds in advance. With many financial instruments, including a low-interest loan from the US Government (Tesla 2010) and an IPO, the company managed to barely survive. The actual lore of the company literally resembles that of an action movie. At last minute financing round on the Christmas eve of 2008 was as close as the company ever got to bankruptcy. (Thompson 2015)

In 2012 Tesla introduced a new car called Model S in the premium luxury sedan market segment (Boudreau 2012). Not only did the company managed to develop a new model with limited funding coming from an extremely difficult financial situation but it also turned out to be both a commercial and technological success. The car could initially run around 500 kilometers in a single charge and could accelerate from 0-100 km/h in 4.2 seconds. On top of that, when tested by the NHTSA (National Highway Traffic Safety Administration) it scored the highest score ever to be recorded by any car company or model at the time. Tesla was back in the game. The zero-cost marketing strategy was amplified and supported by free media coverage. The company was once again the media sweetheart and positive news representation and articles seemed endless.

The whole experience of driving and owning a car was now being challenged. From an objective standpoint, the car outclassed all the luxury sedans at the time in terms of range, speed, handling, and storage space. With its huge tablet-like screen you could stream music directly from the Internet and use a constantly updated map. Usually, when a customer buys a car in terms of performance, the product only goes downhill. But not Tesla. With its constant over the air updates, the car was getting better with time by optimizing its software. Not long after, the Model S received new features like faster charging or an upgraded cruise control for a different type of terrains remotely. Your car would stay in the garage and virtually the next day it would just be better. What traditional car manufacturer could match this experience? Tesla took what was a conventional product and transformed it into a gadget that was constantly evolving.

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Figure 8: Tesla Model S 2012 Interior (Black Tie Stiletto Blog 2011)

The buying experience was also swapped from a pushy dealership middleman to buying the car directly from the Internet or through Tesla ’s official stores. Modeled after the Apple Stores, the physical locations where you could buy the car were at high-end malls or upscale neighborhoods.

"Right now, the stores are our advertising. We're very confident we can sell 20,000-plus cars a year—without paid advertising," (2013) – Alexis Georgeson (Tesla Communication Manager 2012-2017)

The first early adopters mainly located in Silicon Valley were usually paying up to a couple of thousand dollars for trying out new technology. At the release of Model S, they were happily signing off checks for more than $100 000 for an untested product that could be filled with bugs and not work as expected. The company needed not only the money but the boost of confidence that their product is accepted and well-regarded. Model S became the ultimate status symbol allowing its owners to claim that they care about the environment while simultaneously driving the latest technology with a style. Initially, the car was looked up as a fancy gimmick by the traditional automakers but the overwhelmingly positive feedback proved them wrong. Motor Trend announced the Model S as a car of the year for 2013 beating BMW, Lexus, Porsche, and Subaru.

“Shocking Winner: Proof Positive that America Can Still Make (Great) Things” - Motor Trend 2013 Musk and Tesla not only changed the perception of electric cars in a decade but they created a product that suffers no compromise in comparison to the traditional ICU vehicles and in many ways was superior.

At the time, Tesla was building supercharging stations all across the United States. This was a huge investment and it was not very clear if and when it would be recouped, especially at this development stage of the company. Musk was trying to change an entire hegemonic ICU dominated paradigm by simultaneously building an energy network on a shoestring budget. Another crisis was emerging on the horizon in 2013. Firstly, the Model S vehicles did not have $100 000 finish that you would expect for a car of this class. This was due to the fact that the company was learning on the fly on how to smoothen its manufacturing processes. Secondly, to be in the purchase queue for a Tesla, the prospective buyers had to pay $5000 of down payment. These down payments were not necessarily transferred into solid sale numbers as the quality and the word of mouth marketing was problematic. In addition to the previously mentioned problems that stalled the company, multiple service issues were piling up at an alarming rate. The problem was that even with many reservations, the prospect customers were deferring or canceling their orders due to concerns of the non-existent resale market as well as the rumors that additional features will be added to the upcoming Model S iterations (Vance 2015). The situation got so bad that Tesla shut down its factory due to “maintenance”, which was technically true but there are speculations that there is more to the story. According to Ashley Vance, the author of Musk’s biography stated that he gathered more than 500 employees from departments all across the company and in his typical all or nothing fashion said: “So, I don’t care what job you were doing. Your new job is delivering cars.”

His orders were simple – call as many people with reservations as possible and close the deals. Meanwhile, Musk was in negotiation with Google’s CEO Larry Paige on the possible acquiring of Tesla from the giant (Gibbs 2015). Musk did not want to sell the company and was concerned if the new owner would stay true to Tesla ’s mission. The deal was about to be closed when miraculously, he got the news that his new-found 500 salesmen managed to close deals for a huge volume of cars that would keep Tesla afloat for a while. This is another example of what a clear focus in combination with motivated employees that believe in the mission of the company can do.

When released, the 2015 Model X was truly a technological marvel. However, again internal production issues stalled the release dates several times before it hits the public. The falcon-wing doors in a combination with the panoramic view and the newly issued version of Tesla ’s autopilot made the model an instant hit among celebrities. It was the newfound status symbol that nobody really needed but everybody wanted. The car carried a message but also exerted status. Few celebrities wait for their cars to be manufactured but even fewer drive their vehicles around like a badge of honor.

Simultaneously, the company started building its first battery factory in a partnership with Panasonic called the Gigafactory in Nevada, US (Tesla 2014). The whole vision was starting to form as the manufacturing plant would be a zero-emission facility with solar panels that generate the energy for the batteries it produces. Tesla was starting to become much more than a simple car manufacturer.

With the leadership of Elon Musk, Tesla was focused on building as much of the cars as possible internally, which is not common among the mainstream car manufacturers. The days of Henry Ford and his end to end assembly line have been long gone and nowadays the big manufacturers work like a well-oiled logistics machine, bringing in parts for many suppliers and turning them into the final product in a matter of hours. Musk’s ambitions almost tanked the company. Not only, did he wanted to design most of the car components and build them in-house but also Elon wanted to re-invent the whole manufacturing process by completely automating it. The dream was for the Tesla factory to work 24/7, spawning cars in unparalleled efficiency achieved virtually by no car manufacturer by far (Geggel 2018). This turned out to be a major mistake. Tesla was becoming a mainstream car manufacturer that could not deliver its product on time to their clients. From 2016 to 2019 the company was in complete chaos. Again, following their initial plan from 2006, it was time to start manufacturing their mid-size affordable car – Model 3. It was supposed to hit the market and turn the tides finally making the company a profitable endeavor. Instead, Tesla was announcing its worst quarters in Q1 2018 of a net loss of 785 million dollars to a cumulative loss at the time over 6 billion dollars. (Alvarez 2018)

From being the media darling and the company that everybody was rooting for, Tesla became the bull's eye for negative press coming from seemingly everywhere. The constant criticism to the point of resembling a smear campaign was truly ruthless (Pressman, 2018). Many top industry experts and financial gurus predicted that this would be the end of the company. The overpromising and underdelivering for years by Elon Musk was making the Tesla stock – the most shorted US stock in history. The mainstream media outlets' reports were merciless.

“Tesla supporters are like members of a religious cult. Just like Steve Jobs was worshiped at Apple, it’s the same way with Elon Musk … seen as a new visionary god who promises this phantasmagorical future, a utopia of profitability and volume. Steve Jobs delivered and Elon … hasn’t delivered a thing, except increasingly negative cash flow, and an increasing lack of profitability; more and more capital spending.” Bob Lutz, ex-GM executive (CNBC 2016)

Musk was cracking down under the immense pressure. The bad news was pouring from everywhere. From reports of safety violation and inadequate work conditions lawsuits to the departure of large numbers of top executives. The constant bashing from seemingly everywhere destroyed Musk’s emotional state that could be described as a complete meltdown. He fired workers and engineers on the spot, swore profusely, and bragged publicly about working 120 hours per week. Throughout 2018 Tesla was still in a production hell being unable to ramp up the production and meet the demand for their newest Model 3. After multiple months of manufacturing agony, the company swiftly transferred the crisis to logistics, being unable to ship its cars in a timely manner to Europe and Asia. On his 48th birthday, he tweeted that is staying at the factory with no friends, no celebration but trying to fix a global logistics issue (Musk 2019).

His erratic behavior was quickly becoming out of control. From tweets that he would take Tesla private with secured funding that landed him a 20 million dollar fine from the SEC (Security and exchange commission) as well as step down as a chairman of the company. (Wolverton 2018). This, naturally, further damaged the Tesla brand, polarizing the public in two major camps – the brand evangelists versus the general negative sentiment in the public that was skewed by the media. Either Tesla was going to survive to be a legend or it would die like all the previous companies that have attempted their journey. The latter appeared much more possible.

All of this came to an end in mid-2019 after which Tesla introduced their Cybertruck – an unusually looking pickup truck that again turned out to be an enormous commercial success judging by the reservations – more than 250 000. At the end of 2019, beginning 2020 with the finishing of Tesla ’s third Gigafactory in China in just 9 months and great financial results the stocks almost quadrupled in value and the frenzy did not stop till the appearance of the coronavirus that tanked virtually the entire market.

To this day, the interest and the demand for Tesla have not stopped but quite the opposite. Despite all the issues and challenges, the public cannot get enough of the cars. But most importantly, it cannot get enough of Tesla ’s brand and what it represents. The consumers knew of the many issues that plagued the company: the post-sale service is terrible, major delays, high price, quality issues but at the end of the day they simply do choose to actively ignore them in favor of the brand. The question remains why. Tesla ’s history is truly a journey against all odds.

4 How Tesla managed to build a legendary brand from scratch?

Who doesn’t like a good underdog story? It is the incarnation of a noble endeavor. David killed Goliath against all odds. The 300 Spartans stood against hundreds of thousands of Persians in the battle of Thermopylae. This pattern where the noble few fight against the many in an uneven battle echoes through stories all across the globe. We remember those tales to this day. We sympathize with them.

These types of archetypical stories appear to resonate so much with us that they have transcended across time and became legends. The mythology and the facts mix in such a way that they negate each other but also create an extremely strong narrative. The pattern of those tales appears across all cultures which is another proof of their underlying importance. The history of Tesla, although not very lengthy, is filled with all the elements of a violent journey to greatness filled with incredible success, almost complete destruction, conflict, despair, and fighting for what is right.

In the book Legendary Brands by Laurent Vincent (2002) the author makes a distinct difference between an ordinary brand and a legendary brand and it is that they subscribe to their own brand mythology. In that sense, Tesla is involved in two narratives. The first one is the metanarrative that has been omnipresent for more than a century - the inadequacy of electric vehicles (illustrated in chapter 2). The second one – no major car manufacturer has been established in the past 80 years since 2003. If we combine those two almost universally accepted narratives at the time when Tesla was founded, we can deduct that the chances of success of the whole venture were from slim to none. The biggest weakness of the company in its humble beginning was the seed for establishing a legendary brand. The lower the probability of success, the more emotionally charged the story is. The nobler the mission, however improbable, the more the general public sympathizes with it. The perfect ingredients for enticing brand mythology were present.

For a brand to be legendary there are several other objects in combination with a strong narrative that need to work in synergy. Our sacred beliefs define our identity, our value system that in turn affects our lifestyle. Furthermore, it is so deeply ingrained in us that automatically, no matter our conscious desires, we create a set of beliefs and an explanatory logic to answer them. Simply put our capabilities of conceptualizing, abstract thinking, and finding meaning are our most precious evolutionary advantage. This interconnection can also be observed in a legendary brand such as Tesla. In order to be able to deduct these sacred beliefs, one can simply observe the words of Elon Musk. The culture of a company is usually enforced by the top management and among the automakers, Tesla appears to have an unparalleled connection between its CEO and the company.

“Persistence is very important. You should not give up unless you are forced to give up."

- Elon Musk (Brainy Quotes n.d)

“I think that's the single best piece of advice: constantly think about how you could be doing things better and questioning yourself.”

- Elon Musk (Brainy Quotes n.d)

“People work better when they know what the goal is and why."

- Elon Musk (Brainy Quotes n.d)

“When something is important enough, you do it even if the odds are not in your favor."

- Elon Musk (Brainy Quotes n.d)

The common denominator of Musk’s mentality can be directly observed as an inseparable part of Tesla ’s culture and sacred beliefs. Tesla represents everything the car industry has been lacking for decades. A company that exists purely to push the boundaries of the current market paradigms and in many ways show other car companies that what they claim is impossible, is indeed very much possible.

The core difference between the traditional automakers and Tesla is that it is not revenue driven but mission-driven. Years and years the old-school car manufacturers made incremental changes and slightly better iterations of almost identical models to maximize their profits. A bit more fuel efficiency, a bit more room, a shinier design, and a new cupholder. Absolutely the same pattern can be observed in their advertisements. In order to convince the consumers that their product is superior, we are shown beautiful actors in tuxedos and amazing dresses, driving on a perfect road in the middle of nowhere. Rinse and repeat with slightly better cinematography and music. No wonders the public becomes immune to the marketing efforts of the old-school car manufactures.

In turn, Tesla stays true to its mission: “to accelerate the world's transition to sustainable energy”. Not only did the company creates the change it aims for but it also enabled its competition to do the same. Back in 2014 Elon Musk gave away all of Tesla ’s patents for free usage to any car manufacturer (Chambers 2014) – a move thought by many analysts to be insane. When the sacred beliefs define the mission and the vision of the company, no price is too high for achieving it. Even the future of the company itself. This implies the notion that innovation and moving the world forward is far more important than fame, power, and money. This belief is so compelling and attracts an extreme number of brand loyalists that paradoxically brings all of the latter benefits as a byproduct, not as a sole purpose. If tomorrow Tesla goes bankrupt and ceases to exist, the company still managed to succeed in its mission. How many of their competitors can claim the same?

The sacred beliefs not only show the direction of the company but also bond the people that share them. In that sense, a community is being built around the brand of Tesla that brings a sense of purpose. The product transcends to more than it objectively is. Tesla vehicles are not only a means of transportation but also a tool for achieving a sustainable future. By buying one you vote with your money that your beliefs are aligned with Tesla ’s and you want to help them achieve it. Creating this kind of kinship not only between the customer and the brand but also the customers and fans themselves are a key ingredient for creating a legendary brand.

“You do feel a kinship with these people who made the same decision as you to buy a Tesla.”

“Whenever I bump into other drivers at Superchargers or anywhere, there is always a bit of a nod and a wink as an acknowledgment.” - Stephen Fenech (Tech Guide 2018)

According to Vincent for the beliefs to be transmitted, there needs to be an object or an agent that represents them. In the past, these were rituals and symbols. This reciprocal relationship between beliefs and brand agent create a brand narrative that influences the brand culture in a mutually supported system:

Abbildung in dieser Leseprobe nicht enthalten

Figure 9: Brand Mythology System (Vincent, 2002)

It is human nature to intuitively seek proof of our beliefs. We need shortcuts, symbols, postulates that encompass the whole philosophy of the belief system. In Tesla ’s case, the main brand agent is undisputedly Elon Musk. His personal story eerily echoes the one of the company.

“Whatever skeptics have said can’t be done, Elon has gone out and made real.” - Sir Richard Branson (Easto 2017)

The persona of Elon Musk brings not only objective benefits but also intangible value to the Tesla brand. With virtually non-existent marketing budget Musk is the main brand ambassador, influencer, and advocate of the company. His massive following in various social media platforms is the bulk of the exposure that Tesla gets. His every word and interview gets further picked up and multiplied by mass media providing free coverage. His larger than life personality and unique management style polarize the public leaving nobody without an opinion. Love him or hate him, Elon Musk is one peculiar CEO that does generate interest and a loyal following. He is the true brand agent that also prophecies and enforces the sacred beliefs of Tesla. The very same that were influenced by his unusual biography.

[...]

Excerpt out of 101 pages

Details

Title
Tesla’s current state and brand potential. How to derive a brand meaning and create a future that inspires
Author
Year
2021
Pages
101
Catalog Number
V591346
ISBN (eBook)
9783964872616
ISBN (Book)
9783964872623
Language
English
Keywords
electric vehicles, Teslanomics, Tesla, Brand Experience, Legendary Brand, Climate change
Quote paper
Ivelin Dobrev (Author), 2021, Tesla’s current state and brand potential. How to derive a brand meaning and create a future that inspires, Munich, GRIN Verlag, https://www.grin.com/document/591346

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