Tesla case study: How desire creates and solves many problems

Posted on Posted in How to Guide for Marketers

Our Tesla case study shows how Tesla has created such an intense desire among consumers that it caused some problems, but certainly solved many others. Their biggest issue has been their inability to deliver, until now. While over the past five years, they look like an “overnight success,” they have been in business since 2003. It took Tesla the first eight years to sell a few thousand cars. By then, most of the founders were gone, leaving Elon Musk steering the ship. 

In year nine, they launched the high-end Model S car. And, they still only sold 100,000 vehicles by year 12. Tesla is an excellent example of being in it for the long run. 

Then, they launched the Tesla 3 but struggled to produce to keep up with demand. Everyone wanted one, but they couldn’t make them fast enough. From 2015-2019, the stock price went up and down like a roller coaster, doubling from $40 up to $85. And, in 2020, everything started to come together. The Tesla stock went up 10-fold, from $85 to over $800. Elon Musk became one of the richest people on earth. 

Almost twenty years in the making, Tesla has become one of our most beloved brands. 

Tesla Case Study Elon Musk

Let’s map out the Tesla strategy using our five elements of strategic thinking

Tesla started with a desire to shift the car market from gas-powered to electric (vision). While most other electric car companies failed, Tesla cars are remarkably different, as they score high for performance and style (focus). Tesla saw an opportunity to break the usual thinking that energy-efficient meant ugly, slow, and always needing a charge (identified opportunity). 

Tesla has capitalized on the consumer’s readiness to do something for the environment and has created a movement. So, Tesla took a different approach. They started at the high end to create a strong desire for their beautiful cars. And then, they moved down to open up to the masses (market impact). Well, the elite mass! Their cars remain a high ticket item. Finally, following the release of the Model 3 in 2018, their quarterly sales jumped 4-fold over two years (performance result), and the stock price is up 10-fold.

What Tesla does best

  1. Tesla has capitalized on the environmental trend. Tesla has done so well because of its 100% focus on electric vehicles, whereas every other car company has treated it as an option. I equate that like a vegan getting a salad at a steakhouse. Those vegans would much prefer going to a restaurant focused on their beliefs. Tesla understands that being an environmentalist is a lifestyle choice, not an option. The traditional car companies treat their electric vehicles as an afterthought. “We also have that in electric, for $20,000 more.”
  2. Tesla has used the hype-style marketing style of Apple. Elon Musk has borrowed from the Steve Jobs playbook. He uses event-style marketing, an outspoken visionary voice, and he is continually challenging the status quo. Yes, he goes offside on Twitter all the time, but we might be glad that we never saw Steve Jobs tweet. 
  3. Another borrow from Steve Jobs is their simplified product. A traditional car engine uses 2,000 parts. In contrast, the Tesla engine uses only 20 parts. Moreover, Tesla treats their cars like technology. As Apple has done with fewer parts, Tesla can gain better control of their costs.
  4. Tesla treats their cars like technology. They develop software for their cars, similar to how Apple develops software for their iPhone.  Essentially, this allows Tesla to improve its car engine software to enhance the consumer experience every few weeks.  
  5. Stylish designs. Like Apple, Tesla emphasizes style, which adds to the desire. Paying $55,000 or $110,000, Tesla understands that an expensive car must be beautiful. Teenagers want a Tesla car because they are cool, adding to the pent-up demand they have created.

Tesla’s brand idea

Tesla’s brand idea is “the electric vehicle designed for our future, with shockingly high performance, and stylish designs.”

First, let’s use our functional and emotional cheat sheets to see where Tesla should play. 

To help brand leaders kickstart their brand positioning work, I have taken the 9 functional need state zones that expands to over 50 potential functional benefits. As you look through the list, gravitate to the functional benefits you think will fit the needs of your consumers and differentiates your brand by looking for words where your brand does it better than competitors. 

The functional benefits that Tesla should focus on includes works better for you, sensory appeal, and the experience. 

Moreover, we have a list of 40 potential emotional benefits help build an emotional brand positioning statement that differentiates your brand. Below, the emotional benefits that Tesla should focus on includes feeling free, a sense of optimism, and getting noticed. 

Most importantly, you want to own one emotional space in the consumer’s heart as much as you own the rational space in the consumer’s mind.

If you wish to read more on our brand positioning process, click on the button below. 

Once we have narrowed down to potential clusters of the functional and emotional benefits, we take 2-3 support words per zone to create a cluster. Below are key benefit words we will use to set up Tesla.

The Tesla brand idea map

To make sure the brand idea steers everyone who works on the brand, use our brand idea map.

Five main touchpoints reach consumers, including the brand promise, brand story, innovation, purchase moment, and consumer experience. Regardless of the order, they reach the consumer; if the brand does not deliver a consistent message, the consumer will be confused and likely shut out that brand. While brands cannot control what order each touchpoint reaches the consumer, they can undoubtedly align each of those touchpoints under the brand idea.

 

How the consumer touchpoints deliver the Tesla brand idea

  • Brand Promise: The leading electric car, backed by simple software, drives high-performance and stylish designs.
  • Brand Story: Tesla has built a movement that stands alone with an intense desire from brand fans
  • Innovation: Our engines are designed like technology, and we are always investing in getting better.
  • Purchase moment: Simple. Order online, no dealers, sales reps, or negotiations.
  • Consumer Experience: Tesla is a statement brand that creates desire and envy among friends. 

How Tesla’s plan lines up

The Tesla vision statement is “to create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.” There are a few key issues in the way of that vision. 

With an early dominant lead in electric vehicles, how can Tesla maintain their power player position, capturing consumers moving away from traditional gas-fueled cars?

Tesla Key Issues

1. How can Tesla maintain the power player position while competitors are investing in battery technology? 

We see Toyota and Nissan investing in solid-state batteries that will force Tesla to keep investing in new technologies. 

It is hard to get a sense of who will win the battery war. The Japanese government has invested billions in making the solid-state battery work. While the solid-state might be more efficient or longer-lasting, there is no evidence a solid-state battery will make for a faster car than Tesla. Those solid-state batteries will be coming in the 2025-2028 period. The next decade will be interesting to watch the shakeout in the electrical vehicle market. 

2. How can Tesla capture a bigger audience within this decade? 

Despite Tesla’s lead, they remain a niche disruptor for the elite. The current Tesla consumer is 54 years old, 70% male, with an income of $154,000 USD.

Tesla will have to decide if they will continue to own the luxury market and let Toyota and Nissan own the mass market. At the current price points, Tesla will remain the electric vehicle for the elite. Also, if Tesla chooses a broader target option, Tesla may need to fill out its lineup with more practical car choices, especially in the SUV product. 

3. Should Tesla do a better job in getting its message out? 

Many believe Tesla should be advertising, even if in big moments (e.g., Super Bowl), to ensure they own the story that delivers their vision. Elon Musk has become a polarizing figure, with an inconsistent voice on Twitter. There is a belief Elon Musk’s voice maybe be pushing away female consumers, who only make up 30% of Tesla sales. Yet, the Lexus ownership is evenly split between male and female.

It seems Tesla is avoiding advertising, almost for principle, not whether or not it is smart. I’d suggest they look at how Google has done their ads, with big huge stories that connect emotionally with the consumer. 

4. How to keep Tesla focused on winning the EV market? 

As a leader, Elon Musk sends many conflicting signals that can scare investors. Internally, Elon Musk’s approval ratings have fallen from mid-90% to mid-60% over the past few years. Will Elon Musk’s side projects distract from the Tesla battles? Is self-driving a reality or a distraction? 

Here's how Tesla's plan comes together using our Brand Strategy Roadmap

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