A Short Essay On Tesla for School

This assignment was not supposed to be an essay per say. All they told me to do was read the requirements and start writing. Couldn't hurt to throw a little MLA in there could it? It's about Tesla, and I think the essay should say the rest.

Jon Babb

Principles of Marketing

July 5, 2021

Tesla’s Marketing by Jon Babb (Assignment parts 1-3)

Tesla, A Basic Timeline

On July 1, 2003, Tesla was founded by Martin Eberhard and Marc Tarpenning. Named in tribute to the electrical engineer, Nikola Tesla, the company’s original goal was to prove electric cars were far from a compromise, and, in fact, may even be better than traditional gasoline cars. In February 2005, early investor in the startup Elon Musk, injected 13 million of his own money. In 2008, Elon Musk became CEO of Tesla, succeeding Ze’ev Drori. Simultaneously, their first car, the Roadster, entered production. Aimed at wealthier individuals looking to show off the latest in Electric Vehicular technology, the Roadster was a success in its niche. Tesla targeted this demographic hoping it would give them enough capital to produce a cheaper, reasonably priced sedan for the average car buyer. This tactic paid off on June 22, 2012, when the Tesla Model S was released.

Tesla’s IPO (Initial Public Offering) was $17 per share after going public—peanuts compared to their current $647.47 per share as of writing this paper. Their first new factory was in Fremont, California, and was finished in October of 2010 to produce the Model S and future Model 3 cars. The factory now plays a part in producing all current production Tesla Models. In 2014, Tesla open-sourced all their patents, eager for other companies to follow in their footsteps—quickening the pace of their new goal: to accelerate the world’s transition to sustainable energy. Also producing a product called the Tesla Powerwall, Tesla started branching off into the energy industry—using infostructure and research and development they had built in making their own battery cells. In 2015, the Model S hit 100,000 units sold, becoming the world’s best-selling electric car. The Model 3 was unveiled in March of 2016. And, after releasing on July 28, 2017, the car was a success at 276,000 preorders in the first week. Before the Model 3’s release, Tesla had been ranked America’s #1 car company.

After a Twitter incident in 2018 where Elon Musk jokingly hinted at the possibility of taking Tesla private when it hit the share price of $420, the U.S. Securities and Exchange Commission sued Elon Musk—forcing him to step down as Chairman until 2021; when he would be allowed to run again. Still serving as CEO, Elon Musk continued to hold the biggest stake in the company.

Tesla’s Target Markets

Not only serving the car industry, as stated before, Tesla has branched into the energy industry as well. With the active development and improvement of the Tesla Powerwall, Solar Roof, and Tesla Superchargers lining the world’s highways, Tesla sought to provide the infostructure to support their flagship cars. Their products and services are all designed to support each other. Tesla does not have dealerships like the average car company, instead, each car is ordered online and can be repaired at local Tesla Service Centers.

Tesla cars are aimed at wealthier individuals and households due to their expensive nature, but regular price cuts and recent rumors of a $25,000 model in the works means Tesla has not forgotten about the desire for a cheaper Tesla car. Currently, Tesla’s Models S, 3, X, Y, all appeal to different markets within their wealthy minded demographic—with the upcoming Cybertruck appealing to America’s dominant pickup truck market.

After the Roadster’s focus on car collectors and the sort, the Model S was Tesla’s first mass produced consumer car, with their Model X SUV soon pursuing large families. With those cars under Tesla’s belt, the company had enough capital to release their affordable Model 3 sold at 35,000 dollars. The Model 3 reached over 325,000 preorders. Next, the Model Y was released, being a cheaper mid-sized SUV, coming in at 39,000 dollars. All these Models have their designated markets, and all of them have received incremental production upgrades through the years.

Tesla’s Product Lifecycles

These minimal upgrades in the design, quality, and technology greatly increase each model’s product life cycle. Over-the-air software updates decrease the likelihood of glitches, and the lack of mechanical input in their cars reduces the chances of costly recalls. This not only helps Tesla avoid recalls, but it also helps older variations of their models steadily hold their value. For those reasons, I would say every model is still in the growth stage of their product life cycle—except for the original Roadster and original Model S, which appear to be in the mature stage technologically. The Roadster, as a model, has had its production ceased. In that manner, the model as a whole is well past decline stage.

Tesla’s Branding Strategies

Tesla does not run TV, internet, or radio ads like the classical company—instead, Tesla relies entirely on word-of-mouth or referrals, and has since its inception. Their philosophy appears to be against forcing their products on anyone, instead relying totally on genuine respect and ingenuity of their products to create momentum in their market (Even more evident by their lack of a PR department). I would say this has been very effective for Tesla, as well as having created a unique synergetic quality behind all of Elon Musk’s companies. Most notably when Elon Musk shot his own Tesla Roadster on a trajectory to Mars with a SpaceX Falcon 9 rocket. Around once a year, Tesla holds an event centered around announcing a drastically improved aspect of their production, technology, or software. Such was the case in 2020 with Battery Day—the un-classical advertisement I am focusing on for this paper.

Tesla’s Ad in Question

The momentum-creating non-ad, 2020’s Battery Day, was held on September 22 at 1:30pm. The day was highly anticipated by investors, car-buyers, mere fans, (and especially by the competition) alike. Another factor leading to Battery Day’s hype was Tesla stocks having hit $1,000 at the start of their second quarter. This was a big day, and Elon Musk capitalized on it by holding a huge event. To attend the event due to the lockdown, Tesla shareholders had to line up in their eagerly honking Tesla’s to view the stage. So, everyone lined up, the event was held and broadcast live online. Unveiled was a streamlined production process and a brand new unparalleled higher-capacity battery cell. It was a success, and generated lots of media attention.

This is one strategy, to use the audience and fans to spread the news for you, not only gets people talking, but shows a certain honesty behind your company. You are not going to appear greedy for one. I believe this is an effective “ad” strategy, as is evident by Tesla’s recent inclusion on the S&P 500. For those reasons I believe Battery Day to be the best kind of ad (for them), and to have been very successful.

My Chosen Advertisement

Though there were no commercials in the classical sense surrounding the event, there was a lot of online and local promotion for Battery Day. One of which was this slide:

The language used in this presentation slide is simple and effective, reflecting the attitude of the entire presentation. It shows off their new “tabless” battery design, which, if anyone read this ad, would be convinced to be much better than any non-tabless battery design.

References

https://youtu.be/l6T9xIeZTds. Battery Day. 22 September 2020. 5 July 2021.

Office TIMELINE. 28 7 2017. <https://www.officetimeline.com/blog/category/Significant-Timelines>.

Wikipedia. History of Tesla, Inc. 2 7 2021. <https://en.wikipedia.org/wiki/History_of_Tesla,_Inc.>.