Marketing Lessons from Tesla : How Tesla sold 115,000 Model 3 Before Launch

Tesla Model S Marketing : How Tesla sold 115,000 Model 3 Before Launch

When Tesla unveiled its long awaited “affordable” Model 3 electric vehicle this week, the company opened up reservations an hour before the public even saw the car.

Online ordering at https://t.co/46TXqRrsdr will now open at 7:30pm Pacific to ensure no server overload. Presentation still at 8:30.

— Elon Musk (@elonmusk) March 31, 2016

Tesla CEO Elon Musk said at least 115,000 deposits were made before the launch event, and in a little over 24 hours, it more than doubled that number to 232,000 and counting.

Model 3 orders at 180,000 in 24 hours. Selling price w avg option mix prob $42k, so ~$7.5B in a day. Future of electric cars looking bright!

— Elon Musk (@elonmusk) April 1, 2016

The most interesting thing about Tesla — a niche luxury electric car maker — is the role of marketing in selling high cost electric cars.Many people have tried to disrupt the auto industry over the last 40 years and none have succeeded. The process of buying a car is essentially the same as it was a generation ago. And even more interesting is that everybody admits that they would prefer not to buy their car from an auto-dealer.

Innovative Business Model.

Tesla has figured out how to market an electric car.Make it sexy and bypass the traditional avenues.
 Tesla is creatively using marketing to upend the auto industry business model.Get this;

• There are no Tesla dealers
• There are no commissioned sales people
• Tesla cars are marketed and not aggressively sold
• Tesla transactions are conducted online
• The price is the price: no negotiation
• There is no inventory: the Tesla Model S is built to order
• You can’t test drive a Tesla unless you put down a $5,000 deposit
• Usually , You can’t see or drive the car before you buy even if you place a deposit
• You have to wait in line for months or years to get a car
• Longest line EVER #Model3https://t.co/EafMhK3BDC
• — Tesla Motors (@TeslaMotors) March 31, 2016

And the marketing challenges are incredibly difficult

Building a luxury brand is not easy.It like making high qulaity wine. It takes years to perfect and build the reputation. Tesla is only 13 years old. It took around 40 years to build Apple into the most valuable company in the world. Not only are Tesla trying to build a luxury brand from scratch, they are evangelizing a new type of vehicle: an electric car.They are selling a $60,000 — $100,000+ car that has a highly negative connotation

Thanks to @TeslaMotors I’m about to cross this final thing off the list. Forever.#Model3 pic.twitter.com/ItBzrNX4oj

— Gavin Shoebridge (@KiwiEV) March 31, 2016

To surmount all this , they must not only sell a car but an entirely new model of buying and owning a car.While Tesla is starting with expensive vehicles, they clearly have mainstream ambitions. They are investing to build a big car company. How hard is it to build and sell cars in the USA? Look at it this way: Tesla is the second oldest publicly traded auto company in the United States behind Ford. GM went bankrupt and went public four months after Tesla. Chrysler remains private following its own reorganization.

While Tesla has a long way to go to be profitable, producing cars in volume, and moving towards the mainstream, their first home-built product — the Model S — is a success. They have 10,000–20,000 orders and have swept the auto industry awards, winning a host of auto awards and industry accolades.

So how did Tesla do it?

• Get the product Right

1. Start with a great product — Tesla would be dead today if they didn’t build the best car available today. There are too many obstacles — range, lack of road trips, and buyer confusion to name a few. Tesla used electric technology to build a car that can’t be reproduced with a combustion engine. It’s as fast as a Porsche and gets the equivalent of 100 miles per gallon. It has very few moving parts. It is the most aerodynamic car made and has the most cargo space of any car in its class. It’s a sports car that seats seven.

• Target your prospects wisely.

1. Start high and work your way down — It’s a lot easier to build a lust-inducing $100,000 car than a cheaper model. Tesla started with the $100K plus roadster built on a modified Lotus platform. With the Model S, they started with production of $100K vehicles and are working their way towards the $60K entry-luxury models. By starting high, Tesla is letting early adopters fund technology development. As volume increases, prices are coming down. The early super cars are media darlings endlessly discussed in waves of free Tesla publicity.

• Industry Analysis

1. Turn auto industry strengths into weaknesses — Historically, luxury cars have been sold and justified based on the quality of their engineering. Most luxury automobile companies tout “performance through engineering” as the one thing that makes them special and desirable. Tesla marketing focuses on performance through technology while touting the simplicity of the platform. The Tesla Model S pitch reframes the auto industry strength as a weakness. Through the highly-effective Tesla marketing lens, traditional gas cars are dirty, complex, unreliable, and difficult to maintain. In a bold marketing move, Tesla service centers are designed with white floors to reinforce that electric cars don’t have oil and other dirty fluids that leak on the floor.

• Brand Positioning and Psychological marketing

1. The Tesla powertrain is marketed as simple, reliable, and effective.Traditional luxury auto makers focus on “engineering” — Through the Tesla marketing lens, educated viewers see complexity, maintenance, and antiquated technology Traditional luxury auto makers focus on “engineering” — Through the Tesla marketing lens, educated viewers see complexity, maintenance, and antiquated technology. Tesla Service centers have impractical white floors to highlight that the cars run clean without messy oil and fluids

• Integrate marketing into your business model

1. Create a new multi-channel model: Tesla decided not to build a traditional car dealer network. Nobody likes car dealers: even buying and servicing a high-end car like a Porsche is a dreadful experience. Tesla looked at the car buying process and optimized its sales model to fit the way people buy cars today. Since people start online, Tesla designed their process around online information, commerce, and community. Their site is unusually clear, clean, and effective. For people who want to see the car, they are building kiosk stores in malls with Tesla experts who can’t sell cars and who aren’t commissioned. When a buyer is ready, they place a refundable deposit online. If they want to drive a car, they can arrange a test drive after they’ve placed a deposit. Essentially, Tesla is selling cars the same way Apple sells the iPhone.

• Design your sales funnel around End user Experience

1. Build the community & focus on the experience: From the beginning, Tesla has made user forums and user community a key part of the online experience. Tesla marketing highlights the unique Tesla buying and ownership experience and encourages owners to interact with the company and each other in full public view on the Tesla site. This provides a rich base of content — and owner passion — on view for prospective buyers.

• Leverage the media and traditional press

1. While much is new about the Tesla Model S and the accompanying sales and marketing model, one thing is not: the dependence on traditional media. Tesla has been a master at driving press coverage, reviews, and awards for its cars. It’s clear that the company has worked hard to position the brand with the media and to make sure the right messages come through. The company’s #1 message is that they are trying to build the best car ever made and not just the best electric car. This message is frequently repeated by the press.

Marketing Lessons from Tesla: Whats in store

While it’s early and many many risks remain, Tesla is the first company to have the potential to become the Apple computer of the car industry. Like Apple, they are selling a product that is very different than what has come before. Both companies focus on great products and innovation. They are both building their own ecosystem (Tesla’s super charger network is akin to Apple’s build-out of iTunes and the Apple Store) and both are challenging traditional sales models with their own direct distribution system. In fact, Tesla hired Apple’s previous retail chief to build out the new distribution model.

Whatever does happen , Tesla is a great case study for ambitious marketers.