Tesla's recent Model 3 launch is the culmination of a strategy that has enabled the company to create a global brand without spending any money on advertising.
The electric car manufacturer has no ad agency or chief marketing officer and does no paid advertising. Yet it has built a reputation as one of the world’s coolest brands.
Through canny PR, which has even involved highly publicized legal battles, the company has built a strong brand narrative that positions Tesla as a high-end disruptive force in a car industry long overdue for a shake-up.
All this has been spearheaded by founder and chief executive Elon Musk, who has been compared to Tony Stark, the fictional billionaire and engineering genius also known as Iron Man.
Here Marketing takes a look back at Tesla’s history and examines how the brand has achieved its enviable a reputation with next to no marketing budget.
Tesla was incorporated in July 2003 by Martin Eberhard and Marc Tarpenning. It took a lawsuit and six years to settle who should be considered its founders.
Tesla has five official co-founders: Eberhard, Tarpenning, current chief executive Musk, chief technical officer JB Straubel, and Ian Wright, who left the company to found electric vehicle powertrain manufacturer Wrightspeed.
The dispute over the official founders arose after ousted chief executive Eberhard filed a suit claiming Musk was attempting to rewrite history to take credit for founding the company. Eberhard eventually agreed to drop the lawsuit.
Tesla first came to public prominence when it unveiled the Tesla Roadster, the world’s first fully electric sports car. The first Roadster was delivered to Musk in February 2008.
The car’s base price was set at $109,000, as Tesla sought to emulate the life cycle of technology products by coming to market with an expensive, high-end product before opening up to a larger market by lowering the prices of subsequent models.
The Roadster was the first car to use lithium-ion batteries, and the development caused shockwaves in the car industry.
General Motors vice chairman Robert Lutz told the New Yorker that, until then, the rest of the industry believed lithium-ion technology was still 10 years away.
Tesla’s darkest time came in 2008, when it was forced to lay off staff and parted ways with then-chief executive Ze'ev Drori.
The chairman, Musk, stepped into the chief executive’s role. The job cuts came after Tesla was forced to delay the Roadster’s release because of problems with the transmission. Musk reportedly attributed the job cuts to the company having too high a burn rate (the rate at which a startup spends its capital).
Tesla turned around its perilous finances in December when it raised a fifth round of funding worth $40 million.
After an 18-month build up, Tesla Motors launched on the Nasdaq stock market on June 29. The initial public offering raised $226 million for the company. The flotation was a welcome boost for America’s flagging car industry, which had been bailed out by the U.S. government. Tesla was the first American car manufacturer to go public since Ford in 1956.
Tesla tore up the car dealership model that dominated the U.S. market by introducing its own-branded stores. "The type of place we are striving for combines the feel of an Apple store with a Starbucks and a good restaurant," said Musk. "The Tesla Motors representatives at our stores will not be salespeople and will not operate on commission. Anyone visiting need not worry about being accosted…Representatives will be there to answer questions, assist with a purchase – only if asked – and to see if there is any way they can be helpful."
The first store opened in the Bay Area of San Francisco in the fourth quarter. Shoppers were not able to buy the cars in the store but had to order them directly from Tesla online. The stores, along with word-of-mouth and PR, act as Tesla’s advertising.
On 13 April, Tesla proclaimed it had reinvented the car buying process when it opened a concept retail store in the Santana Row retail district of San Jose, California.
The move was revealed ahead of the introduction of its second car, the Model S, which was positioned as the world’s first premium electric sedan. The Model S base price was $57,400 and was the stepping stone to the affordable Model 3.
The new store introduced an interactive experience that enabled potential customers to explore Tesla’s technology, learn about owning an electric car, and configure their car in a design studio.
The Tesla store also employed "mobile service rangers," who travel to customers’ homes to perform annual inspections, firmware upgrades, and other services.
In May, Tesla enjoyed its first profitable quarter. In this landmark year, the company also began to expand overseas. On August 7, it delivered its first Model S to a retail customer in Europe and, later in the month, it opened an assembly plant in Tilburg, Netherlands.
Tesla open-sourced its patents to advance sustainable transport. The move generated widespread positive publicity and reinforced Musk’s reputation as a champion of the environment and human progress.
"Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology," Musk said in a blog post. "When I started out with my first company, Zip2, I thought patents were a good thing and worked hard to obtain them. And maybe they were good long ago but, too often these days, they serve merely to stifle progress, entrench the positions of giant corporations, and enrich those in the legal profession, rather than the actual inventors."
A year later, Tesla won the moral victory in its long-running legal battle with the car-dealership sector, which claims Tesla’s direct sales model is uncompetitive. The Federal Trade Commission supported Tesla’s direct sales model, which it compared to other advances that have improved the way people shop.
On April 1, Tesla unveiled its highly anticipated Model 3, which will have a base price of $35,000. The car will be Tesla’s first widely affordable model and will go into production in late 2017.