This is second of my series of blogs on the Tesla Motors marketing strategy. In this blog I will examine why the product (in this case, their first car) played a key role in their early success. One of the things Tesla Motors (http://www.teslamotors.com/) got right early on was targeting their product for the right customer segment. Tesla Motors branded their car as a world class sports car instead of being sold as just a premium electric vehicle. The Tesla Roadster could go for 0 to 60 in ~4 seconds and compared very well with the premium sports cars of its times ~2007-2008.
The key strength was their superior battery pack technology (of densely packing the same Lithium Ion cells that form batteries of our standard laptops in a highly efficient array) and an excellent power train. They were an early adopter of smart outsourcing. To save funds and manufacturing costs as a start-up, while the power train was manufactured in-house, the actual car manufacture was outsourced to Lotus Cars Limited. These partly complete cars called “Tesla Roadster Gliders” were then integrated with the power train. Though they sold only ~2450 roadsters across five years 2008-2012, The company gained such a niche reputation that this helped them earn several hundreds of advance bookings when their Model S Sedan was formally launched and bookings were commenced years in advance.
Having said this, did Tesla Motors have a fairytale run? Hardly! For starters they suffered two fairly embarrassing product recalls in May 2009 and Oct 2010. They had fairly well publicized transmission related issues that delayed manufacturing timelines for their Roadster. The global financial crisis from 2008 onwards hurt the luxury car market and lack of funds (as announced in a section of the media) hurt them as well.
Two key turning points financially for the struggling Tesla Motors were a 50 million dollar investment by Diamler AG and more importantly the selection of Tesla Motors along with other firms like Ford, Nissan and now defunct Fisker for the US department of Energy’s Advanced Technology Vehicle Manufacturing Loan Program (ATVM). Tesla Motors received 465 million $ (the smallest loan among these firms) and invested it brilliantly to acquire and develop the then shut down NUMMI facility from Toyota and speed up manufacturing of their flagship product, the Model S Sedan.
The success of the Model S Sedan has made Tesla Motors the first successful new car company in the US in over 90 years! What are the reasons behind this? well that will the topic for my next blog! Thanks for reading.