Brand Management DECEMBER 2014
2014 Brand of the Year
Motors
WHO’S BUYING A TESLA: THE COMPLETE CONSUMER PROFILE NO-COST MARKETING STRATEGY: DOES IT REALLY WORK? NEW TESLAS ON THE WAY: MODEL X AND MODEL 3 TESLA VS THE COMPETITON
BMW i8 Porsche Panamera S E Hybrid Audi E-Tron
Sabeeha Ahmed Marketing 3320.001 Haworth Fall 2014
Table of Contents Company.........................................................................3-7 Category and Competition..........................................8-9 Products Within Category..........................................10-11 Brand Analysis..............................................................12-13 Consumer Profile..............................................................14 Advertising/Marketing Communications......................15 Media................................................................................16 Promotions........................................................................17 Internet and New Media...........................................18-21 Other Information and Interviews.............................22-23 Brand Value......................................................................24 Research Methods......................................................25-27 Recommendations.....................................................28-29 Sources..............................................................................30 (Originally published December 2014, updated March 2015)
2
Tesla Motors, Inc. Tesla Motors, Inc. was founded in and formed strategic partnerships with
2003 by Silicon Valley engineers who wanted to build electric cars. This was at a time when the technology was still developing and there were virtually no electric vehicles on the road. Elon Musk joined as Chief Executive Officer in 2008 after having served for four years as chairman. Their first electric car, the Tesla Roadster, was produced and sold from 2008 to 2012. The Roadster was the first highwaycapable all-electric vehicle for sale in the United States, and it was based on the platform of a Lotus Elise. The company went public in 2010,
Toyota and Daimler. Tesla builds lithium-ion batteries, components, and powertrains for its own cars as well as for other automakers. Currently, Tesla is selling and producing the Model S five-passenger sedan, and has announced two new cars to go into production in the future: the Model X SUV and the $35,000 Model 3 Sedan. Teslas are manufactured in the Fremont, California plant and are shipped and sold around the world. Tesla is currently headquartered in Palo Alto, California.
Tesla Roadster
3
Major Activities, as Reported in Tesla’s 10-K, 2014 Supercharger Network Tesla is building a network of 90 kWh fast charging equipment, each called a Tesla Supercharger, throughout North America for fast charging of Model S. The Supercharger will provide free and fast charge to Tesla Model S customers, who can replenish 50% of the battery in 30 minutes and 100% in an hour. The superchargers will be strategically located along key routes in California and between Washington, D.C., New York, and Boston, with Projected supercharger stations in North America by 2015. more to come in the future. Service Tesla provides service for its electric vehicles at company-owned service centers or through qualified mobile technicians. Tesla owns and operates a total of 29 service locations as of December 31, 2012. Tesla owners can also upload data from their vehicle and send it to the company for faster and more efficient over-the-air updates.
A Tesla service technician inspects a Tesla Model S.
Selling Cars and Powertrains Tesla makes and sells powertrains to Daimler and Toyota as one of its core business components, although this relationship is fading. Tesla sells the cars they make to individual customers through retail galleries and online, avoiding dealerships and franchises altogether. Customers peer into a Tesla gallery in a shopping mall. MANUFACTURING Tesla vehicles are manufactured at a plant in Fremont, California. The facility was formerly known as New United Motor Manufacturing, Inc. (NUMMI), a joint venture between General Motors and Toyota. It was closed in 2010 by both parties and now is now owned and operated by Tesla. Tesla plans to make all their current and future vehicles at this site.
A Tesla is assembled in the factory in Fremont.
4
Annual Report
(Excerpts from the 10-K, Feb 26, 2014)
The Model X SUV is in production and will be based on the Model S platform. The deliveries will begin in early 2016. Another vehicle is also under way,the model 3 mass market electric car, with a range of 200 miles and a price of under $35,000. The lithium-ion batteries for vehicles are being designed so that they can be adapted to last longer, up to 100,000 miles, before being replaced. Tesla is working on building a supercharger network across the country that will charge the battery of current Model S cars and future model Tesla cars fully in less than an hour. Tesla intends to “grow sales and service network by approximately 75% during the year ending December 31, 2014”. Tesla is in partnership with Panasonic to build more efficient long lasting batteries for their cars at a new factory in Nevada within the next few years.
Financial Report The majority of Tesla’s operating expenses are consumed by research and development, and Tesla plans to spend $1.5 billion in capital expenditures in 2015 to get the gigafactory and the Model 3 ready for production, as well as meet the goal of producing 500,000 cars by the end of the decade. The revenues have been increasing each quarter from sales of the Model S, yet their net income has not turned a profit in several quarters due to operating losses. Tesla has reported a net loss of $75 million for the third quarter of 2014 and a $110 million loss for the fourth quarter of 2014. Daimler sold its entire 4% stake in Tesla, while Toyota has sold an undisclosed amount of their stocks in Tesla as well. The market capitalization of Tesla is currently around $27 billion. Tesla’s stock price has reacted positively to market news of the battery factory in Nevada, and the development of two new vehicles in the future, but has fallen in recent months due to falling gasoline prices, the delay of Model X deliveries, weak sales in China, and a disappointing fourth quarter with a greater than expected loss.
5
Key Personnel
Elon Musk Co-Founder, CEO, and Product Architect
JB Straubel Chief Technical Officer
Deepak Ahuja Chief Financial Officer
Franz Von Holzhausen Chief Designer
Jay Vijayan Chief Information Officer
Jerome Guillen Vice President, World Wide Sales
Arnnon Geshuri Vice President, Human Resources
Diarmuid O’Connell Vice President, Business Development
Peter Carlsson Vice President, Supply Chain
Gilbert Passin Vice President, Manufacturing
6
Recent News February 12, 2015
February 19, 2015
Tesla has announced its foray into batteries for the home.
Tesla is trying to fight a law in Texas that favors franchised dealerships over company owned stores.
The stationary battery would allow you to store energy from solar panels and reuse the power, thereby eliminating your need for the energy grid or utility companies to power your home. The move would allow people to save money on electricity bills, and you might even be able to sell back excess power to the grid one day. The battery will be unveiled in the upcoming months, and is a diversification of Tesla’s products, which until now has soley focused on the Model S sedan.
A concept of the Tesla home battery system, to debut by the end of 2015
A group of state lawmakers filed legislation that would allow Tesla Motors to sell its luxury electric cars at as many as 12 stores in Texas, something which has received backlash from dealerships because they say it puts Tesla at an unfair advantage. Tesla’s business model is to sell directly to consumers, bypassing the middleman dealers as it does in many states. But a longstanding law bars that practice in Texas. New legislation would allow manufacturers that have never sold their cars through independent dealerships in Texas to operate the limited number of stores. Tesla has faced success with this model in several other states.
A Tesla Model X, displayed outside the capitol in Austin, Texas 7
Category and Competition Category Definition: Luxury Electric Cars This is a small niche category; it combines two more encompassing categories: luxury cars and electric cars. According to the Dow Jones, Tesla Motors is classified under the “Electric/Gas/Biofuel Vehicles� Industry.
Other competitors include luxury brands like Audi and Mercedes; also fuel efficient brands with plug-ins and hybrids: Toyota, Nissan, Volkswagen, and GM.
There are about 20 EVs and plug-in hybrid models on the market today.
Direct competitors include the Porsche Panamera S E Hybrid (right) and the BMW i8 (bottom) Porsche Panamera S E-Hybrid is a plug-in hybrid luxury car. Retail: $107,095
BMW i8 is a plug-in hybrid sports coupe. Retail: $136,650
8
History Of Category Although early versions of the electric car start being produced in the late 1800s, they have limited range and are not like the electric cars of today. The mass-produced Model T makes gaspowered cars widely available and affordable. This eventually becomes more popular than electric cars because of easily available gasoline. The demand for electric cars has been dependent on gas prices throughout the twentieth century; a need for a fuel efficient car fades in the 80’s as gas prices stabilize; the demand quickly rises as gas prices increase to record highs at the start of the 21st century. In 2000, Toyota introduces the first mass produced hybrid, the Prius, and it becomes a success in terms of sales and a combined fuel-efficiency of 41 miles per gallon. In 2006, Tesla announces their Roadster, a luxury electric sports car with a range of 245 miles on one charge. This car is produced and sold from 2008-2012 and then production is halted. In 2010, Chevrolet unveils the first ever plug-in hybrid, combining electric and gasoline for a better range and more convenience. In December of the same year, Nissan introduces the all-electric Leaf with zero emissions. In 2012 Tesla begins deliveries on its secondgeneration electric car, the Model S. In 2013, battery costs for electric cars drop significantly, helping make them more affordable for consumers, along with federal tax credits for cars with better emissions. Today, there are 20 electric cars and 36 hybrid models available in the market.
Major Players • Lithium-ion batteries: 65 and 85 kWh op- tions enable a range of 200-300 miles on one charge • Partnership with Panasonic to build bigger and more efficient batteries • Relationships with other car makers (Daimler and Toyota in the past, possibly others in the future) to produce batteries, powertrains, and EV components • Charging Stations across the country for Tesla customers to take advantage of • Energy Department- Tesla gets emission credits for producing zero emission cars, which they can then sell to gain revenues
Legal Considerations In certain states, Tesla is banned from directly selling to consumers: • Texas • Arizona • Maryland • New Jersey • Michigan • Virginia
Regional And Seasonal Factors The regions where Tesla is banned from selling in the US rely on purchasing out of state or online. Outside of the US, Tesla is selling their cars to 36 other countries but is running into trouble keeping up with charging stations. Seasonal factors include delivering Teslas on time throughout the world, as there is a pre-order system to buy the vehicles.
Methods Of Distribution
• No dealerships • Retail galleries in certain locations • Order online • Wait list for Model S • Pre-Order Model X 9
Products Within Category Product-Form Description Model S • Fully electric, four-door, five-adult passenger sedan. • The Model S offers a range on a single charge of up to 265 miles on the 65 kWh battery • Modular battery pack in the floor of the vehicle, enabling it to be swapped out • Luxury features: a 17 inch touch screen driver interface, advanced wireless connectivity
New Product Introductions/ Benefits And Appeals/Innovations
Model X • Deliveries starting early 2016 • Crossover Utility Vehicle • Zero Emissions, fully electric • All-Wheel Drive • 0-60 in 5 seconds • Falcon Wing Doors open up and out • The second-row seats slide all the way forward. • Tesla touchscreen Infotainment system • 60 or 85 kWh battery option • Access to Tesla’s Supercharger stations
• Wireless updates, which allows continuous improvement to the Model S over time. • Five star safety rating • 60 kWh and 85 kWh battery pack option • Performance model has a top speed of 0-60 in 3.4 seconds
Tesla Model X
Tesla Model S 10
Share of Category by Product
The estimated projections (2014 and beyond) are forecasted from current sales of the Model S and predicted sales of the Model X based on pre-orders and production. Also based on targeted sales estimates by Tesla. (Note: the Model 3 is announced but not yet in production)
Recent News About Product Category March 2, 2015 Audi announced a new version of the R8 supercar for 2016, and this time it will be an “e-tron”, meaning there will be an all electric mode set to rival Tesla’s Model S P85D directly. The e-tron will have a 92kwH battery and an output of 280 miles on pure electric range, outdoing the Model S’s 85 kwH battery pack and 265 mile range. The car us set to debut at Geneva later in March. The R8 e-tron will allow Audi to develop further electric cars including sedans, and will pave the way for cars competing directly in Tesla’s class in terms of performance and price. Audi R8 e-tron 11
Brand Analysis
Tesla Model S Merceds S class BMW 7 Series Audi A8
10 or less 11-39 40-99 100-499 500-1199 1200 or more
Mitsubishi GM Toyota Nissan Tesla
Ford Honda
12
Recent News About competitor brands
Pricing Trends (base price) • • • • • • •
BMW i8 $136,650 Porsche Panamera S E Hybrid $107,095 Tesla Model S $69,900 BMW i3 $41,350 Chevrolet Volt $34,345 Toyota Prius Plug in Hybrid $29,900 Nissan Leaf $29,010
January 2015 Chevrolet introduced the new all-electric Bolt at the North American International Auto Show in Detroit. This is the company’s first foray into an all-electric car. Chevrolet has an electric plug-in vehicle, the Volt, which gets 50 miles on electric range and the rest powered by a gasoline hybrid engine.
Toyota Prius Plug-in
The Bolt would get some 200 miles pure electric range and retail for $38,000 before incentives when it starts production in late 2016. The car is seen by many as a competitor to the similarly ranged and priced and Tesla Model 3, which has yet to reveal a concept or concrete date for production.
Chevrolet Volt
The Bolt is GM’s fist all electric car under the tenure of CEO Mary Barra and could determine the success of the brand as more cars being sold these days are crossovers and SUVs due to the low gasoline prices and stable economy.
Nissan Leaf
BMW i3
Chevrolet Bolt
13
Consumer Profile Demographic Of Users
Decision Makers Vs. Purchaser
Tesla owners have double the average household income of other Electric Vehicle (EV) owners ($293,200). The owners are predominantly male, wealthy, work full time, are concerned with the environment, and live in cities.
When Tesla customers look to buy a new vehicle, they’re often coming from a luxury car such as a BMW, Mercedes, or Lexus. This means that they have purchasing power in the luxury segment. These customers are early adopters because Teslas are the first allelectric luxury cars to penetrate the market since its inception in 2010.
Frequency Of Purchase Customers are more likely to be adding a Tesla to their garage (51%) rather than replacing a vehicle with its purchase.
Place Of Purchase Tesla customers can browse cars at retail galleries and order cars online. Customers in Texas, Delaware, Maryland, Virginia, New Jersey, and Michigan must purchase their vehicle outside of their respective state because of local legislation banning the direct sale of Teslas without a third party dealership.
Heavy-User Profile California residents are more likely to buy a Tesla, where seven of the wealthiest zip codes in America include cities in California where the Tesla is the most popular vehicle.
Awareness And Attitude
Normal Purchase Cycle Compared to the 16% average rate of replacement within the luxury market, Tesla vehicles are added to households at three times the typical rate.
Brand Loyalty/Switching More than a quarter of Tesla buyers in the United States owned a Toyota-manufactured vehicle at the time of their Model S purchase. (Includes Toyota, Lexus, and Scion vehicles). Nearly 11% of Tesla buyers owned a Mercedes-Benz, and 10% had a BMW. Tesla drivers were more likely to say they would buy their cars again in the 2014 Consumer Reports buyer survey, which surveyed owners of 350,000 cars. Tesla’s Model S beat Porsche this year for the top spot on the survey scoring 98 out of a 100 points for consumer satisfaction.
Owners of the Tesla Model S are concerned about the performance of the car. The Tesla Model SP85D’s speed of 0-60 in less than 4 seconds rivals that of the Porsche 911. The car is seen as a luxury electric car that does not sacrifice performance for zero emissions. This can compare to other commonly known electric cars such as the Volt or the Plug-in Prius, which are seen as more functional. Elon Musk stands by a Tesla Model S
14
Advertising/Marketing Communications Creative strategies of Tesla
Examples Of Past And Current Executions
Tesla Motors has no advertising, no ad agency, no Chief Marketing Officer, and no dealer network. This is highly unusual for corporations in general.
Tesla has relied on viral marketing and word of mouth to spread their brand awareness and it seems to be working.
Tesla is not located along main roads like car dealerships. This is because they forgo traditional dealerships in favor of smaller stores.
With their original Roadster, Tesla was put on the map as a high-end electric sports car and that reputation continues with the current Model S.
Tesla has 35 stores across the world currently, and is looking to expand in the future.
The Model S orders are adding up every month and Tesla “delivered a record 7,785 Model S sedans in the third quarter” of 2014.
Tesla markets towards wealthy customers in upscale shopping malls and is located strategically to reach their demographic. Tesla has no plans to hire agencies or run ads in the near future. The in-house marketing team has seven employees. Another internal team runs the website, where customers order directly. This saves the company millions in marketing costs, so they can focus on their stores and have a more personal and direct relationship with customers.
Specific Promises, Appeals, Claims, Special Effects Model S (85 kWh battery option) • • • • • • • • •
306 mile range on full charge 5.4 seconds 0-60 mph 140 mph top speed 8 year infinite mile battery and drive unit warranty Supercharger included Supercharger can replenish half your battery in 20 minutes Supercharger will give you 170 miles of range with one hour of charge $7500 federal tax credit Annual fuel cost savings estimate $4270
Currently, the retail galleries are a way for Tesla to reach new customers. This is because they do not have sales representatives dependent on sales commissions like at a traditional dealership.
Info On Competitive Brands • Nissan spent $25 million advertising its Leaf EV in 2012 • Most other car brands debut their new cars at auto shows, either internationally or at Detroit every year. • For example, the Porsche Panamera S E Hybrid debuted in Shanghai and the BMW i8 debuted in Paris and Los Angeles as a concept car. • Traditional advertising for car companies also include television commercials, YouTube videos, billboards, and print ads. • Most of these brands also employ use of social media and have a loyalty and following from that base, as does Tesla.
15
Media Category and Brand Spending Tesla does not spend money on marketing; they spend money supporting their retail galleries and online support
Seasonality/Regionality • Most Tesla vehicles will be delivered months after initial purchase, due to limited production capabilities when compared to established automakers • In jurisdictions where there is no Tesla store, a customer may purchase the vehicle over the Internet
Media Employed By Top Brands • BMW employed ad agency KBS+ to advertise for them, including campaigns for the i3 and i8. TV commercials and web takeovers kicked off the campaign during the 2014 Olympics to announce the electric cars. • Venables, Bell, and Partners launched the Audi “Green Police” ad during the 2010 Super Bowl, which earned over 3 billion earned impressions worldwide. • Cramer-Krasselt is the ad agency responsible for Porsche’s Panamera TV Spot.
Spending Patterns • Tesla generally spends more on research and development than on traditional marketing. • The selling, general, and administrative costs include operating the retail galleries and selling cars online. • These costs have risen from $101,489,000 in the quarter ended December 2013 to $155,107,000 in the quarter ended September 2014.
Competitor Spending • BMW spends around $150 million dollars in advertising costs each year • Nissan spent $25 million to advertise the Leaf last year • GM spent $1.78 billion in advertising costs, with $300 million of that budget set towards digital advertising. • Fiat Chrysler Group spent $1.77 billion advertising for their entire auto group.
Media Spending Compared With Market Share
• Ford spent $3.9 billion in marketing costs globally, about 3% of its total revenues for that year.
GM: 3% BMW: 0.28% Ford: 5% Fiat/Chryser: 17%
16
Promotions Promotions Used In Category • Tesla does not offer promotions directly to customers • The federal government gives a $7500 tax credit for the purchase of an EV, reducing the price of the Tesla • Individual states may also offer EV incentives in addition to the federal credit
Major Brand Promotion • Tesla cites fuel cost savings and environmental benefits as a way to promote the brand over competitors • It is competitively priced among luxury models in its class • The Model S is currently the only all-electric luxury five passenger sedan on the market • Tesla owners are allowed free access to Supercharger stations to charge their cars
Success Rates Of Promotions • Because Tesla markets to a high-end consumer, a price reduction or promotion would not necessarily persuade potential buyers towards a sale • In most cases the owner has not seen or driven the car before they purchase it • Tesla has been successful in terms of sales without incentive based promotions.
Competitor Promotions • All electric cars purchased are eligible to receive the $7500 credit from the federal government and other state based incentives varying on the place of purchase • Dealer promotions for competitors to Tesla can include 0% APR, special financing, trade-in promotions, sales, and other incentives based on seasonality (Black Friday, Labor Day, New Year’s)
An example of promotions offered by GM 17
Internet and New Media Website: http://www.teslamotors.com/ Purpose Of Site: To browse and learn about Tesla’s vehicles and purchase Tesla vehicles E-Commerce Activities • Primarily sell vehicles through website • Manage financing for vehicle purchases • Redirect customers to service centers • Update owners on information about their vehicles
Social Media Activities • Tesla is currently on Facebook, Google+, Instagram, and Twitter • The Facebook page posts links to news and updates about Tesla cars and events • Consumers post on their Facebook page; reception is overwhelmingly positive • The Tesla twitter tweets links, pictures and news about Tesla • Twitter account sometimes retweets users sharing their experiences with Tesla cars • The Google+ shares most of the same links and photos as the Twitter account • The Instagram account posts photos of Tesla vehicles shared by customers
SOCIAL MEDIA STRATEGY • Tesla posts the latest news and pictures on all their social media accounts • The users are engaged by all the content shared and often comment on posts • Elon Musk, CEO of Tesla, tweets about the company and is followed by more than 1 million; Tesla has around 400,000 followers • Tesla and Elon Musk often retweet each others’ tweets • Elon Musk also posts on Tesla’s blog • The online forums on Tesla’s website work as a social network for Tesla customers to interact with each other • Tesla does not currently have a formal social media strategy or a management dashboard • Tesla recently rehired Ricardo Reyes as communications chief after Reyes’ two year absence. He will oversee public relations, communications with customers, and Tesla’s online presence. 18
Facebook page
Twitter page
Instagram page
Google+ page
19
YouTube Tesla posts videos about announcements, events, and press videos relating to its cars. Recently, user’s own videos of Tesla cars, specifically the Model S Performance Dual Motor Car, have gone viral with millions of views- adding favorable opinions and showcasing the raw talent and power from the world’s fastest electric sedan. The attention from user’s own videos about Tesla has been positive and has made Tesla cars a household name. This type of attention is free marketing for the company.
Tesla Motors official YouTube page
A viral video of the “insane mode” and reactions of passengers in the Tesla P85D has reached over 7 million views in 1 month
A user submitted video of a Tesla Model S P85D beating a Dodge Challenger Hellcat in a drag race to become the world’s fastest electric sedan has also gone viral with over 2 million views since January 2015. 20
Internet and New Media Continued Do The Executions Properly Support The Brand? Tesla does not engage with its followers on Facebook or Google + by replying to any comments; they only post links and pictures. The Twitter account is better about retweeting users and replying to users to help answer any questions or promote their experiences with Tesla. The social media accounts do not send out unified messages, and some of the networks converse with consumers better than others. Analysis: Tesla is seen as a high tech company with a passionate CEO who encourages discussion about his brand. The social media executions do not necessarily match the perception. On Facebook and Google+ the brand does not actively encourage followers to join the discussion, although many of them are willing to do so, and post positive comments about the brand and its cars. This is a missed opportunity for Tesla to market themselves for free. In social media, everything is shared with followers, so they should capitalize on the positive perception and comments left by others. Tesla does not reply to comments and only post pictures and links. The Instagram and Twitter are better about reposting users’ experiences and replying, but still has potential for more active involvement with users. All the social media networks should have the same purpose of engaging the customer fully. This way, the consumer will be able to relay their positive experience to their other followers. This is extremely important for Tesla since they rely on free and viral marketing based on word of mouth as their primary source of new customers.
21
Other Information/Interviews June12, 2014 Tesla’s CEO Elon Musk has decided to open source all the technology that Tesla had once owned in patents. Tesla’s patents were in areas of electric vehicles and car batteries, where they are pioneers in the industry. By giving up the patents, Musk hopes to encourage other auto makers to develop and create new technologies that will improve the efficiency of vehicles in the market. “You want to be innovating so fast that you invalidate your prior patents, in terms of what really matters. It’s the velocity of innovation that matters” says Musk, noting that technological advances are what puts Tesla ahead of its competitors. Elon Musk wants to make electric cars the future, a mass market vehicle that is produced by all car companies to help reduce emissions and global warming.
February 2013 Elon Musk spoke at a TED talk about his companies, Tesla, Space X, and Solar City. On Tesla: “The goal of Tesla has always been to have a sort of three-step process, where version one was an expensive car at low volume, version two is medium priced and medium volume, and then version three would be low price, high volume. So we’re at step two at this point. So we had a $100,000 sports car, which was the Roadster. Then we’ve got the Model S, which starts at around 50,000 dollars. And our third generation car, which should hopefully be out in about three or four years will be a $30,000 car. But whenever you’ve got really new technology, it generally takes about three major versions in order to make it a compelling mass-market product. And so I think we’re making progress in that direction, and I feel confident that we’ll get there.” His vision for not only Tesla but his other companies has been to technologically advance while doing the most good for our planet. Musk hopes one day that all cars on the road will be electric and that solar power will be the dominant source of our energy needs.
Elon Musk at a TED talk, February 2013
22
Personal Experience with Tesla Motors Recently, I was able to test drive a Tesla Model S sedan at NorthPark mall. (bottom left). A friend sent me a link from their website to RSVP for a free test drive, and the very next day a representative set me up with the drive! It was an incredible experience for me because after researching so much about Tesla, I was able to tie that knowledge with the experience of driving a Model S first hand! The ride was quiet as you’d expect, but also very comfortable with more technology than I know what to do with! The range was some 265 miles on pure electricity and they had charging stations in the parking lot to charge the lithiumion batteries between drives. The pop up gallery (bottom right) in NorthPark had opened this June. The representative I met told me that even though Texas has lots of laws to navigate while trying to sell Teslas, he had made a couple of sales by the time I came in. He doesn’t work for commission so there was no pressure for a sale, which was nice. Even though they are not allowed to discuss price and specifics of sales, purchases of Tesla cars have been very popular in the state. The gallery had one Model S where you could sit in and look around, while the rest of the store was filled with Tesla merchandise and the walls were lined with photos, trims, and interior options for the Model S.
There was an interactive dash (top left) where you have 4G access to the Internet with directions to the nearest charging station, front and rear facing cameras, Internet Radio, and much more.
23
Brand Value Discuss The Brand Value And Whether It Has Increased Or Decreased This Year Tesla has a brand value that has rapidly increased since its creation in 2003. With a distinct vision to build performance cars that also happen to have zero emissions, to the unique business and marketing plans, Tesla is unlike any other company in the world. The brand Tesla means much more than just an electric car. It is a lifestyle, a performance, and a display to the world. The success of the Model S can be seen throughout all major cities in America, a show of both style and eco-friendliness. The introduction of the new Model X SUV is bringing the brand Tesla into a bigger demographic, one where families can share the convenience and luxuries of an electric SUV. With the introduction of a $35,000 car within the next few years, Tesla is bringing electric cars to the masses, which has never been done before. Tesla has also been ahead when it comes to technology. The new battery factory in Nevada will bring both technology and jobs to Nevada, thus bringing revenue into the state and the US economy as a whole. The brand Tesla is synonymous with technology, environment, luxury, and performance. Overall, Tesla’s brand value has increased this year and will continue to increase with the advent of the new cars and new technologies it creates.
24
Brand Exploratory Quantitative Survey Rank the features of a Tesla in order of importance to you. #
Answer
1
2
3
4
Total Responses
1
The looks
2
2
1
4
9
2
Zero emissions
2
3
2
2
9
3
Technology
0
3
5
1
9
4
Value for the price
5
1
1
2
9
Total
9
9
9
9
-
Is it favorable to you that Tesla does not operate at dealerships but instead online and at retail galleries? Response
%
No
7
78%
Yes
2
22%
Total
9
100%
#
Answer
2 1
Would free charging stations across the country sway you in terms of purchasing a traditional car vs. an electric car like a Tesla? Response
%
Somewhat Likely
4
44%
1
Not very Likely
2
22%
4
Absolutely
2
22%
3
Very Likely
1
11%
Total
9
100%
#
Answer
2
How would you rank the following cars in fuel efficiency (1 is the least fuel efficient, 10 is the most) #
Answer
Min Value
Max Value
1
Toyota Prius
5.00
9.00
3
Porsche Panamera Hybrid
4.00
2
Chevy Volt
4
BMW i8
Average Value
Standard Deviation
Responses
7.25
1.39
8
10.00
7.00
2.45
8
3.00
9.00
6.00
1.93
8
1.00
8.00
5.13
2.36
8
How likely are you to buy a Tesla in the future if the price were below $40.000? #
Question
Very Unlikely
Unlikely
Undecided
Likely
Very Likely
Total Responses
Mean
1
If you are in the market for a new car
4
3
1
1
0
9
1.89
2
Compared to other cars that are similarly priced
1
2
4
0
1
8
2.75
3
If energy efficiency was your main concern
1
1
1
4
1
8
3.38 25
Brand Exploratory Continued Qualitative Survey What is the first car that comes to kind when you think of “electric car�? Text Response View Tesla View environmentally friendly View Prius View volt View Tesla View Hybrid View Tesla View The car Justin Bieber drives??? And the volt car, idk the brand.
What is your opinion of Tesla Motors?
Text Response View dope View Sleek View they seem to be a good brand but expensive View they are really cool, but I don't know if they are actually practical View Expensive, but nice car View They're good View Innovative but because it is so unique there are a lot of inconveniences in regards to repair or recall. View It's cool.
What is one word you would use to describe Tesla Motors?
Text Response View efficient View Awesome View innovative View eccentric View Expensive View Cool Wheels View Electric View Nice
26
Who do you view as competitors to Tesla Motors?
Text Response View none View Smart Car View other high end car companies (BMW, Mercedes, Lexus, etc) View none View Prius View Toyota View Honda View Prius????
What brands do you associate with Tesla Motors? Text Response View none View Space X View other competing brands; same as previous question View Northpark View none View Toyota, Honda View cars View Nikola TEsla?
Analysis Based on the survey, less than 50% of respondents thought of a Tesla when “electric car� was mentioned. Hybrids are more prevalent than electric cars and the Prius was mentioned several times throughout the surveys. The word hybrid had a better perception among fuel efficient competitors, even though on average electric cars get more equivalent miles per gallon than do hybrids. The perception of Tesla was that it was luxurious and expensive, but none of the respondents directly linked it to eco-friendliness. The fact that Tesla plans to introduce free charging stations moved over half of the respondents to consider purchasing electric cars over traditional cars. Competitors for Tesla ranged from no one, luxury cars, and fuel efficient cars. This means that the public perception of Tesla is not clear when it comes to defining the market segment that the company belongs to.
27
Recommendations According to the survey conducted, the Porsche Panamera Hybrid was seen as most fuelefficient competitor listed among the BMW i8, Toyota Prius, and Chevrolet Volt. This suggests that Tesla should associate with more luxury brands to have a perception that is greater or comparable to Porsche. This could include associating with BMW and Porsche and proving that Teslas are as luxurious and capable of the same performance. In some cases the Tesla even has more technology and better capabilities than its counterparts. The value for the price was the most important factor of a Tesla according to the survey. Tesla should associate more with Panasonic and the technology based in their cars and show the customer the amazing value of the battery packs that allow the cars to drive and last for up to 100,000 miles. SMART and high-end luxury cars were mentioned as competitors to Tesla. Tesla can leverage these brands by highlighting the relationships they have. Tesla has supplied battery packs to SMART cars and Mercedes-Benz cars that enable them to keep up with technology they did not possess. Other brands that came to mind when Tesla was mentioned include: Space X, NorthPark, high-end cars, and Toyota/Honda. Tesla can leverage Elon Musk, the CEO of Tesla and Space X. Elon Musk is very passionate about his companies and is the face of Tesla. He should be the spokesperson for every major news event or update about Tesla and could have a personal relationship with the customers to give them the confidence and satisfaction of their purchase. North Park is a high-end mall in Dallas, which houses a Tesla gallery. Across the country, high-end malls such as NorthPark could be associated with Tesla and bring in the target demographic in order to bring in more sales of the Model S and future Tesla cars. This could also improve the perceptions of retail galleries over dealerships in the survey. Toyota and Honda are developing their own fuel cell cars and therefore are entering into direct competition with Tesla vehicles. Tesla should disassociate with these brands. Toyota has already sold its stake in Tesla and no longer has a relationship where they buy electric batteries and motors for the RAV4. Since Toyota has already backed away from a relationship with Tesla, there is no need to rekindle the alliance. Tesla can position itself as a more premium vehicle with electric technology when compared to Toyota and Honda’s current hybrids. Tesla can deal with competing fuel cell cars by introducing more diversified future models.
28
In the future, when Tesla wishes to reach the mass market, they should go with more traditional marketing methods like its competitors to reach the full demographic. For now, the method of no marketing costs helps them remain a niche brand that has a built-in customer base. Tesla has an opportunity to improve its marketing, however. The fact that there is no Chief Marketing Officer and no official marketing team is a unique position in the market of overcrowded advertising for automobiles. Even so, Tesla should be able to market at least to the target markets where they overlap with competitors, like the luxury segment or the hybrid/plug-in segment. For instance, their social media should be managed by someone with experience dealing with consumers yet who has a deep knowledge of the company, even if this means training an employee in that realm. If not, Tesla has the opportunity to outsource their marketing and will be able to reach their customer base based on their objectives, without taking away the time of any of their own employees. Tesla needs interactions with its customers to grow its base. Even though Elon Musk may be the face of the company, and most of Tesla’s news is marketed through him, the customers are a huge part of Tesla’s future. They will appreciate a personal relationship though social media and other forums, and this way, their brand loyalty to Tesla will greatly increase.
29
Sources
• “BMW I - Overview - BMW North America.” BMW I - Overview - BMW North America. N.p., n.d. Web. 23 Nov. 2014. • Cain, Timothy. “GOOD CAR BAD CAR.” March 2014 U.S. Vehicle Sales Rankings. N.p., 03 Apr. 2014. Web. 23 Nov. 2014. • Caldwell, Jessica. “Drive by Numbers - Tesla in All 50 States.” Edmunds. N.p., 29 Jan. 2014. Web. 23 Nov. 2014. • Dechert, Sandy. “Tesla Scores Again With.” CleanTechnica. N.p., 21 Aug. 2014. Web. 23 Nov. 2014. • Hirsch10, Jerry, F. “Who Buys Teslas? Prius Owners and Drivers of Exotic Cars.” Los Angeles Times. Los Angeles Times, 10 Feb. 2014. Web. 23 Nov. 2014. • Hull, Dana, and Peter Delevett. “Tesla’s Media Strategy: Build a Brand without Spending on Advertising.” San Jose Mercury News. N.p., 5 Apr. 2013. Web. 23 Nov. 2014. • Kessler, Aaron. “Tesla Reports Loss, but Beats Wall Street Expectations.” The New York Times. The New York Times, 05 Nov. 2014. Web. 02 Dec. 2014. • Levin, Doron. “Michigan to Tesla: Dealers only.” Fortune Michigan to Tesla Dealersonly Comments. N.p., 22 Oct. 2014. Web. 23 Nov. 2014. • Loveday, Eric. “Strategic Vision Says Testosterone Is What Sells the Tesla Model S to Wealthy Americans.” Inside EVs Strategic Vision N.p., n.d. Web. 23 Nov. 2014. • McCarthy, Michael. “Tesla Generates Small Sales, Big Buzz Without Paid Ads.” Advertising Age News RSS. Ad Age, 10 June 2013. Web. 22 Nov. 2014. • Musk, Elon. “All Our Patent Are Belong To You.” Web log post. Tesla. Tesla Motors, Inc., 12 June 2014. Web. 05 Dec. 2014. • Porsche Panamera S E Hybrid. Porsche, n.d. Web. • Ramsey, Mike. “Tesla Confirms Nevada to Get Battery Factory.” The Wall Street Journal. Dow Jones & Company, 4 Sept. 2014. Web. 23 Nov. 2014. • Ramsey, Mike. “Tesla Pledges to Boost Output as Loss Widens.” The Wall Street Journal. Dow Jones & Company, 5 Nov. 2014. Web. 02 Dec. 2014. • Russolillo, Steven. “Tesla’s Scorching Stock Price Faces Earnings Test.” MoneyBeat RSS. Wall Street Jornal, 7 Aug. 2013. Web. 23 Nov. 2014. • SEC. Tesla Motors - Annual Report. Tesla Motors - Annual Report. N.p., 07 Mar. 2013. Web. 23 Nov. 2014. • “Transcript of “The Mind behind Tesla, SpaceX, SolarCity ...”” Elon Musk: The Mind behind Tesla, SpaceX, SolarCity ... TED, Feb. 2013. Web. 05 Dec. 2014. • “Toyota Sells Some Tesla Shares, Cooperation Still Possible.” Yahoo Finance. Reuters, 23 Oct. 2014. Web. 23 Nov. 2014. • “TSLA Income Statement.” TSLA Income Statement | Tesla Motors, Inc. Stock - Yahoo! Finance. Yahoo Finance, n.d. Web. 23 Nov. 2014. • Vance, Ashlee. “Why Elon Musk Just Opened Tesla’s Patents to His Biggest Rivals.” Bloomberg Business Week. Bloomberg, 12 June 2014. Web. 04 Dec. 2014. Vance, Ashlee. “Why Elon Musk Just Opened Tesla’s Patents to His Biggest Rivals.” Bloomberg Business Week. Bloomberg, 12 June 2014. Web. 04 Dec. 2014. • Yamamoto, Arata. “Toyota Unveils Mirai, The First Mass-Market Zero-Emissions Car.” NBC News. N.p., 18 Nov. 2014. Web. 23 Nov. 2014.
30