Tesla spends $0 on marketing and advertising. They do not have a Chief Marketing Officer, marketing, or PR department. Yet, in spite of this, Tesla is the top 10 largest companies in the world by market cap. How did Tesla grow to this size and how does Tesla’s $0 marketing strategy work?
In this article I’ll break down what contributes to Tesla’s success and what levers they pull to promote their products and services.
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What makes up Tesla’s $0 marketing strategy?
Clear and Inspirational Mission Statement
Tesla’s mission is to accelerate the world’s transition to sustainable transport.
The above mission statement served Tesla from it’s inception in 2003 to 2016.
Tesla’s mission is to accelerate the world’s transition to sustainable energy.
Sometime in 2016, Tesla changed one word on their mission statement from transport to energy.
Here are reasons why I think the mission statement contributes to Tesla’s marketing success.
Clarity and Focus: The mission statement tells you exactly what they are aiming to do. A statement that helps align the company’s efforts and resources together.
Addresses a Global Challenge: It addresses an increasingly concerning global issue, which is the need for sustainable energy versus relying on fossil fuel resources.
Inspirational and Aspirational: The mission is ambitious and inspirational, challenging the existing status quo of how the world consumes and generates energy.
Differentiation: At first, Tesla positioned itself leading the charge in the electric vehicle industry. Once they solidified that position, Tesla repositioned itself again as the pioneer for energy. This has helped Tesla differentiate itself from incumbent players.
Alignment with Market Trends and Consumer Preferences: There has been an increase in consumer preferences demanding sustainable products and services over time. Tesla’s mission statement aligns the company with changing market trends and consumer preferences.
Credibility and Authenticity: Tesla was founded in 2003 and over the last 20 years their actions have remained consistent with its mission. They have earned public trust and have a proven track record as a result from their actions in becoming the number one largest electric vehicle manufacture in the world.
Ability to Attract Talent: Tesla’s mission statement attracts top talented minds that align with their mission. According to Universum’s 2022 US Rankings, SpaceX and Tesla (both Elon Musk companies) were ranked the top 2 companies engineering students want to work for.
Superior Products and Services
The public tends to respond to precedents and superlatives. - Elon Musk in 2012 Caltech commencement speech.
Elon has often spoke about his belief that people are likely to take action or be interested in something if they are the biggest, best, or first of its kind. Products or services can’t be just be better in one area, products must have a long list of superlatives (an order of magnitude) that’s better than the competition.
Here’s a short list of superlatives showcasing why Tesla’s products are better than the competition.
Tesla makes the safest cars: Tesla’s cars are the safest as tested by NHTSA, an agency of the US Government.
Tesla’s have little to no maintenance: There are no oil changes, spark plugs, timing belt, transmission oil, or other traditional mechanical services to contend with given that the electric car’s battery and drivetrain are completely sealed.
Tesla electric cars have great performance: The Tesla Model S Plaid is currently the fastest production vehicle in the world with a 0-60mph time of less than 2 seconds.
Tesla’s are fully electric: There is no need to ever pay for gas. You can even charge at home from the same 110v outlet you charge your phone and leave with a full tank everyday.
Best driving assist technology: All Tesla’s are equipped with cameras and sensors that provide 360 degrees of coverage. These equipment feed Tesla’s autopilot and full self driving team to create a solution in the future where the car will drive itself. Though that is yet to be seen, these sensor suites currently provide the best driving assist technologies such as lane keep, blind spot monitoring, parking assist, collision warnings, and many others. Over the air updates are consistently being pushed to improve these functions.
Security: Cameras on the car are not only used for driving assists, but they can also be used as security recordings in the event of an accident. They also function as surveillance while the car is in park.
Teslas are innovative: Tesla's culture operates like a Silicon Valley software startup versus like a traditional auto company. Elon's first principles philosophy have been ingrained into the DNA of the company, thinking from the atoms up. As a result of this, you'll find that their manufacturing, software, paint, battery, and assembly processes are a cut above the rest. Have you seen the CyberTruck?
Maximum fun: Tesla didn’t want to simply just make a car. They wanted to make something that people would get maximum enjoyment and fun out of their vehicle. Tesla’s infotainment systems are able to browse the web, watch streaming services, and play video games. You can also program Tesla cars’ lights, doors, windows, and speakers to sync with your favorite song.
I mean I think at Tesla it's the most fun thing you could buy ever. That's what it's meant to be. It's not exactly a car, it's actually a thing to maximize enjoyment. It's maximum fun. - Elon Musk, Ride the Lightning Podcast Episode 200.
If your product is objectively best in its class, people take notice and tend to want to purchase and own the best.
Exceptional Customer Experiences
From the initial purchase to the post purchase experience. Tesla makes it fast, easy, and hassle free. To purchase a car from a traditional auto manufacture, you have to visit a car dealership. You then would have to speak with a car salesman. From there you haggle and negotiate for hours on end before settling on a purchase price with which you’re still uncertain on whether or not you’ve received a fair deal. Non-transparent pricing and a hostile car shopping experience have plagued the car shopping experience.
Tesla’s way to purchase a car is simple. Everyone pays the same price as displayed on their website. You order the car as if you’re buying anything else you typically buy online from. When the car is built it either gets delivered to your home or to the closest Tesla service center.
Here’s why I think Tesla’s customer experience is successful.
Online e-commerce Amazon.com like experience: Tesla made car buying as simple as buying anything online.
Mobile service: Ifyou ever need service, scheduling appointments and communications are all done through the Tesla app. Majority of services does not require the owner to take time out of their day to visit a service center. What Tesla does is sends a mobile technician to come out where you are. Most services are completed without any interaction between the owner and the Tesla technician.
Test drives: Instead of visiting a car dealership and having the car salesman ride along with you while they try to put you in a headlock to buy the car, you can schedule a test drive through Tesla’s website. Test drives are done in private without anyone riding along with you.
Showrooms: Because Tesla’s are a direct to consumer model, they do not have a dealership network. Tesla’s own showrooms where people can experience and learn about Tesla products. Staff at showrooms are trained to educate rather than sales.
Service centers: In the rare event your car does need service, Tesla provides their flagship vehicles as loaners. If none are available, they give you a choice of uber/Lyft credits and/or partner with a car rental company.
No haggle, transparent pricing: What you see on the site is what you pay and what everyone else pays too. There are no under the table deals and Tesla employees also pay the same price just like everyone else. Even Elon’s mother doesn't get a discount.
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World class in Referral and Influencer Marketing
Tesla exemplifies excellence in referral and influencer marketing, creating an amplified cycle that continuously boosts its brand. Tesla owners share their positive experiences which promotes word of mouth. Additionally, Tesla has cultivated an ecosystem of content creators who dedicate their platforms exclusively to the brand. Lastly, Tesla’s enticing referral program generously reward advocates with perks ranging from supercharging credits to free next generation roadsters.
Here’s why I think Tesla’s referral marketing is successful.
Word of Mouth: As of 2023, there are roughly 3.7 million Tesla’s on the road worldwide. As Tesla sells more Teslas, Tesla owners will show and tell all their friends and family about their vehicle. As more people get to learn and experience a Tesla first hand, it will create more demand organically through word of mouth.
The more Teslas Tesla sells the more Teslas Tesla sells. - Steven Mark Ryan, Solving the Money Problem.
Strong Influencer base: Tesla has created a rare opportunity for creators to earn a living solely covering Tesla. For example, there are many YouTubers that earn a living covering a range of companies, but it is rare for a YouTuber to focus their content on a single company as often there isn’t enough content to talk about or the audience seeking to learn about the company isn’t large enough. Put it another way, I don’t see a lot of YouTubers quitting their day jobs to cover Toyota everyday. However, I do see a lot of YouTubers making a living to cover Tesla everyday. Here are the most notable ones creating Tesla content daily: Solving the Money Problem, Tesla Daily, Farzad Mesbahi, Brighter with Herbert, and countless others.
Referral program: Tesla has often used their own referral program as a lever to generate demand. Tesla’s referral program is incredibly generous for those that can drive a lot of sales. Here are some of the awards Tesla has provided for their referral program: Free next generation roadsters, supercharging credits, CyberTruck raffle, and even a picture of yourself launched into space via SpaceX’s rocket.
Branded Merchandise Marketing
I don’t know of any other brand that does brand merchandising as well as Tesla does. I’m not exactly sure how I can find the answer to this, but I’d wager that it’s possible that Tesla makes a decent profit on branded merchandise marketing rather than it being an expense.
Here’s why I think Tesla’s Brand Merchandising is successful.
Tesla shop: Tesla has a dedicated Tesla shop to sell branded merchandise. At the Tesla shop you can find merch such as t-shirts, hoodies, and hats which isn’t all too different than other brands that sell branded merchandise. What makes them different is when Elon Musk announces merchandise which typically relates to roasting themselves or critics of Tesla. These items are usually limited edition and sell out in minutes. Here are some of my favorite merchandise that has shown up over the years.
Short Shorts: It was for sale for $69.420. Launched as a tongue-in-cheek jab towards short-sellers and critics of Tesla.
Giga Texas Belt Buckle: Launched to commemorate Tesla’s new factory and HQ in Austin, Texas.
Partnerships: Tesla has also been known to partner up with other brands to sell branded merch. Some of these include partnerships with Hot Wheels to sell die cast models and RC cars, Lost Surfboards by Mayhem for a Tesla Surfboard, or Radio Flyer for a Cyberquad for kids.
It was Elon Musk’s intentional strategy and philosophy to not spend money on marketing, PR, and advertising. He held a strong belief that a company should focus on making its product great. As long as the product is truly exceptional, it will earn its own attention and sell itself.
Here’s why I think Elon Musk has been successful at contributing towards Tesla’s $0 marketing strategy:
Tesla Events: For every product unveiling, announcement, delivery event, and shareholder meeting, Elon Musk has been there to host it. These events garner a lot of media attention. My favorite Tesla event to recall was the CyberTruck unveiling. A steel ball was to be thrown at the CyberTruck window to demonstrate the strength of the CyberTruck’s armored glass. Instead, the steel ball shattered the window which shouldn’t have happened. This unintended mishap generated a viral social media cycle that dominated headlines. Instead of being embarrassed with the situation, Tesla embraced the mishap and launched a graphic t-shirt with a cracked CyberTruck window.
Media Tours: Elon is known to be willing to be interviewed on podcasts, youtube channels, and traditional media outlets. He stays in public view and is often willing to be outspoken and candid to discuss anything related to Tesla.
Twitter: Twitter is in the top 15 largest social media networks globally. Elon has the largest Twitter following with 143M followers at the time of this writing. He often tweets about Tesla along with other companies he’s involved with. It’s worth emphasizing that Elon can send a tweet that can potentially reach 143M people at any given time organically without advertising is quite impressive.
Tesla’s $0 Marketing Strategy is Coming to an End.
Wait what? Yes, it’s true. At Tesla’s 2023 Annual Shareholder meeting, @realMeetKevin asked if Tesla would advertise. Much to everyone’s surprise, Elon took the feedback seriously.
We will try a little advertising and see how it goes. - Elon Musk, 2023 Tesla Annual Shareholder Meeting
Now that Elon has changed his stance on advertising what would that look like?
Back in 2017, A 10 year old wrote a letter to Elon to suggest that fans create homemade commercials for Tesla. Elon agreed and picked the winning submitted commercial. We could see something similar like this again, but this time Tesla might put budget behind the ad to boost it.
Advertising needs to be as close to content as possible.
If advertising is informative and entertaining than it can start to approach content. - Elon Musk