Why Tesla Will Never Be A Successful Car Brand

Because it's a technology brand

An old proverb states,  'If it walks like a duck, quacks like a duck, looks like a duck, it must be a duck'. 

 
So anyone studying Tesla should not have been surprised last week when Elon Musk announced that he would make Tesla patents available to competitors. Why? Because from the get go, Tesla has done nothing but walk, quack and look like a tech firm. Musk has eschewed all conventional automotive category behaviors in favor of technology behaviors. 

Economies of Scale vs Innovation Trickle Down?

First, let's look at the way Tesla has approached fostering electric adoption. Let's compare that approach to Nissan, the leading pure all-electric offering from a conventional car company. Both brands have professed a long term vision of mass adoption of electric cars. But each brand has selected their own approach, apparently informed by the lens of their respective categories. 

Since Henry Ford invented the assembly line, car brands rely on economies of scale to drive profit. That's why Nissan chose to aim at the heart of the market, in hopes of ramping up volume quickly to ensure that profit targets would be met through the achievement of volume targets. Volume targets meant that the offering would need to be affordable.  Being affordable meant that Nissan would need to make choices. One choice was to eke out as much driving range (100 miles) as they could with lower cost technology. Think Ford Model T. 

Because technology brands believe in 'trickle down' to drive profit and eventual volume, Tesla chose to aim squarely at early adopters to bring the very best technology to market and then built a decidedly premium offering around that technology.  In doing so, they were able to offer a driving range that is almost 3 times as great as Nissan....at close to 3 times the price. The idea is that, with further innovation, today's technology will become cheaper over time and new technology, with even greater driving range, will take its place in the premium slot.  And because of the halo created by the original premium offering, a mass audience will covet cheaper versions with the original technology, since it is now attainable. Think iPhone 5C.

Hardware vs Software?

The sophistication of new cars means that they are more like mobile devices than analog machines, yet recalls, even when they involve software glitches always require a trip to the dealership. This is because conventional car wisdom views dealership visits as opportunities to sell additional services or even a replacement vehicle. And that makes franchisees happy.

When Tesla was under investigation for vehicle fires last year, it was determined that the low vehicle stance created a risk to the battery casings from road debris. Tesla chose to fix the problem by sending out wireless software upgrades that adjusted the height of the vehicle. No dealership visit was necessary. And because Tesla has a adopted a more tech-like sales and service model, no franchisees were unhappy.

Product vs Ecosystem?

In the automotive business, product is king. Build a great one, and they will come.

But tech brands are much more likely to operate in an environment where products depend upon new infrastructures, connectivity and content. Thus tech brands belong to business ecosystems in which brands serve multiple roles, and form alliances to accelerate innovation. Sometimes these alliances are with suppliers, and sometimes with competitors.

In the Tesla as mobile device ecosystem, it is just as likely that Tesla would build a charging network, as it is that Tesla would offer to share technology with competitors who might in turn contribute back to the ecosystem.

So only time will tell if technology brand behaviors will drive success in a category steeped in 20th century business behaviors.  But if Elon Musk succeeds, he will have also succeeded in moving the automotive category out of the Industrial Revolution and advancing it into the digital age.   

Please Trust My Brand

Why?  Because I Said So!

One of the cornerstones of brand building is building trust.  Regardless of its positioning, a brand that can't be trusted is likely a brand that will not be purchased.

Many times in my career, I’ve worked with brands whose market research uncovers a 'trust' deficit.  And, as a result, ‘trust’ gets shoehorned into their marketing strategy. Unfortunately,  brands that do this have as much a chance of building trust as the proverbial polyester clad used car salesman who tells you that the car he is trying to sell you was owned by a little old lady who only drove it to church on Sundays.

Like people,  the only way for brands to build trust is to be trustworthy by being true to themselves. And any attempt to try to ‘message’ trust in communications will likely backfire, and ultimately erode trust even further.  

While this seems fairly evident, there are several recent examples of well known brands attempting to tell me why I should trust them as they pull the wool over my eyes.

Last week, I was a bit astonished to receive a 17 lb package from Restoration Hardware containing a shrink wrapped stack of 13 'Source Books', including the personally irrelevant 'Baby' and 'Child' books.  But what really got my attention was the cover page of the mailing that prominently stated: 'Heavier Load = Lighter [carbon] Footprint'. 

And not only did RH call this out on the mailing, they actually issued a press release telling everyone about how this mailing was part of their sustainability initiative!  Perhaps they were  trying to overcompensate for previous criticisms of their mailings?

Personally, I was dumbfounded and, a bit insulted that RH would try to convince me of something that was so apparently disingenuous, and surprised that they could be so out of touch.

And apparently, I was not the only one to react this way. 

Twitter was abuzz with comments like: 'Wow restoration hardware not gonna be accused of tree hugging.  WTF, get the internet'

Someone was actually moved to create a 'Stop Restoration Hardware Catalog mailings'  Facebook page. 

And BloombergBusinessweek wrote a not so flattering article on  the subject.

Instead of being lauded for their sustainability, RH earned a fair amount of negative social and traditional media.This is a classic example of how a brand's actions speak volumes (no pun intended)!

The real shame here is the missed opportunity for RH to advance its true brand story.  RH states that they are 'curators of the finest design in the world'.  And the idea of producing 'sourcebooks' is actually aligned to the way a curator should behave.  And while sending a massive stack of catalogs might not be the most efficient way to reach your audience in the digital age, if you had stuck with that story, catalog recipients may or may not have liked you more, but they wouldn't have learned to mistrust you.

But this isn't an isolated case.  Earlier this year, I spent a month in Australia.  It was right around the time that General Motors announced that it would no longer produce Holden cars in Australia.  Over the years, Holden has been a unique brand in General Motors portfolio.  A brand created specifically for and built in Australia, Aussies felt a deep affinity to and pride in the brand.  Thus, Aussies felt as if they had been slapped in the face when GM decided that they would take 3,000 jobs from Australian soil, and begin importing rebadged Chevrolets from China.

While this action alone was enough to chip away at Holden brand equities, the Aussie wounded pride would likely have healed over time.  But then, Holden betrayed every Australian's trust by saturating the airwaves with a campaign entitled, 'We're Here'.  The ads feature smiley Australians staged next to Holden cars saying 'We're here', while  a voice over tells the audience that Holden has been in Australia for over 100 years, and, 'while we will no longer make cars IN Australia, we'll always make cars FOR Australia' .

https://www.youtube.com/watch?v=0XZndLtBfoU

Needless to say, the Aussie audience was not fooled.  This ad, instead of instilling confidence and trust in Holden fired up the negative earned media machine with

Tweets like: 'Dear Holden, your 'We're Here' ad is utterly ridiculous...you won't be here...cut the crap', and numerous parodies on YouTube.  

And of course, it earned negative editorial press. 

Holden, like all brands should have known better than to try to message trust.  For in the end, a brand's behavior will define it better for its audiences than any words it chooses to use to describe itself.

Of course, Holden is owned by General Motors, the company that was recently exposed for  instructing their employees to use deceptive words to cover up dangerous product defects.