Can Tesla Ride Earned Media Forever?
In the summer of 2014, an unassuming patch of Nevada desert became home to a building that could reshape the way we think about transportation. That swath of dry land, now known as the Gigafactory, is the lithium ion battery factory where Elon Musk and his team at Tesla are building the material that will power over one million electric vehicles annually by 2020.
Tesla’s investment in the Gigafactory is the company’s latest bid to accelerate sustainable energy adoption. “It’s worth highlighting the sheer scale of the Gigafactory,” Elon Musk, the famed CEO of Tesla, said in an address to Nevada legislators, who brokered the deal. “It’s not just going to be the biggest lithium ion battery factory in the world—it will be bigger than the sum of all other lithium battery factories in the world.”
In addition to its size, viewers have said it looks like its own city, the Gigafactory signals a significant shift in Tesla’s business model. While the company is often assumed to be a luxury auto-manufacturer, the Gigafactory is the manifestation of Musk’s mass-market vision.
In a 2006 blog post, Musk revealed his secret plan to “Build a sports car/ Use that money to build an affordable car / Use that money to build an even more affordable car.” Eleven years later, Musk has done just that.
Tesla used profits from the company’s first model, the sleek Roadster, to invest in its next iteration of luxury electric vehicles: the Model S sedan and Model X SUV. This, in turn, produced sufficient funds to develop the company’s first affordable electric vehicle, the Model 3, priced at $35,000.
The dramatic pivot into the affordable market raises questions as other competitors race to claim their slice of the electric vehicle pie: How will Tesla compete with other affordable manufacturers? And what will its marketing strategy look like now that it is no longer strictly a luxury brand?
From luxury to mass market
From the beginning, Tesla’s marketing budget has been notoriously slim. The mythology is that Tesla ran on a $0 marketing budget early in its life—which is not entirely true, but the company’s investment in marketing was limited, to say the least. Tesla had practically no advertising budget, resisted hiring a CMO, and operated out of a series of showrooms rather than automobile dealerships.
Rather than invest in traditional marketing, Tesla focused on earned media, capitalized on a generational thought leader (Musk), and cultivated an active community of fans around the concept of sustainability.
Tesla’s most valuable marketing tool to date is its earned media coverage on energy projects, such as the Gigafactory, and its disruption of the traditional auto industry. Elon Musk regularly conducts interviews about his personal background, innovation, and his plans for colonizing Mars. While most of these stories do not directly relate to Tesla products, they reinforce the narrative that Tesla is a leader in sustainability and innovation. Such coverage has been—and remains—a critical part of Tesla’s strategy to remain top of mind.
In a 2013 interview with AdAge, Jeremy Anwyl, vice chairman of Edmunds, explained it this way: “You have to credit [Musk], who’s very Steve Jobs-like in how he deals with the media. A lot of the attention is not generated through what we consider traditional advertising. It’s really through social media.”
Alongside Tesla’s YouTube, Facebook, and Twitter pages, a good portion of that social buzz comes from Tesla’s subreddit, which features contributions directly from Musk. Whether it’s announcing a commitment to Mars exploration or commenting on hygiene habits, Musk is an integral part of the Tesla community.
This community, while easy to overlook, points to one of Tesla’s key differentiators: Company leaders understand the importance not only of engaging with consumers where they live, but also inspiring wider discussions built around the brand.
Community engagement has even spawned a new marketing avenue for Tesla: user-generated commercials. After Musk received a letter from a fifth-grader who noticed there were many good “homemade” Tesla commercials, and that perhaps Tesla should have a contest to determine the best, Musk took her up on her idea.
Yet as Tesla moves into a mass manufacturer of affordable electric vehicles, inspiring that core community of fans may not be enough.
The knowledge gap
While Tesla has generated an impressive amount of buzz surrounding the new Model 3 electric vehicle—by March 2016, 115,000 customers made a down payment of $1,000 on the Model 3 before knowing what it looked like—experts believe Tesla and other electric vehicle manufactures haven’t done a great job of educating the market.
According to Micheal Smyth, assistant director at the National Alternative Fuels Training Consortium (NAFTC), there is a gap between consumer interest in electric vehicles and knowledge on the available products. “The public knows about alternative fuel vehicles, especially electric vehicles, but somehow they still don’t have the basic knowledge on what an electric vehicle does and the different types available,” he said. “Many times we get questions asking, ‘Well, which one should I buy?'”
As a nonprofit, NAFTC does not direct consumers toward any particular brand, but Smyth is surprised by the overall lack of content that explains the high-level differences between alternative energy cars, the benefits of each type, and the basic mechanics of specific vehicles. “If your average consumer is interested in electric cars and doesn’t understand how the vehicles operate, there is a lot of education that is left to be done,” he said. The knowledge gap presents an opportunity for organizations, including brands like Tesla, to lead the conversation.
Tesla had practically no advertising budget, resisted hiring a CMO, and operated out of a series of showrooms rather than automobile dealerships.
Tesla’s blog essentially functions as a media toolkit for company announcements. It’s two main competitors—General Motors’ $30,000 Chevy Bolt EV and Volvo’s $40,000 electric car expected to be available by 2019—also lack a substantial body of content to bridge this consumer gap.
GM has a “Sustainability” portion of its website, though articles function as press releases, announcing company developments in sustainable production. Volvo, too, has a site section called “CSR & Sustainability” that highlights how cities around the world are working with the automaker to invest in clean energy, but each piece focuses on Volvo rather than consumer education.
“Every manufacturer is bringing out more electric drive vehicles,” Smyth said. “But as far as I’ve seen, there is no place where consumers can go for the basic information on how these vehicles work mechanically or address their specific needs.”
No one would disagree that Tesla’s earned media marketing strategy has won customer’s hearts. But as Musk’s company moves to colonize the affordable electric vehicle market, it’s fair to ask if his brand’s earned media prowess and brand power is enough to win customer’s wallets as well.