Brands in the News

Brand Portfolio Questions for Tesla

29 Mar 2024  

The golden company Tesla is in the news for disappointing results. The stock price is down, and people are wondering about the company’s prospects.

Tesla is facing many different issues, ranging from competition to the erratic behavior of Elon Musk.

One of the most interesting problems is Tesla’s brand.

The Tesla Brand

Tesla has soared in popularity due to the combination of a remarkable product and a special brand. Tesla’s performance as a car is terrific; people rave about the driving experience.

Tesla has built a special brand. When people think about Tesla, they often mention things like expensive, tech-savvy, environmentally friendly and modern.

Tesla has leveraged a classic formula:

A great product + a remarkable brand = Success!

Of the two, the brand is always more important. It is difficult to maintain product differentiation. Most technologies are possible to copy, if you have enough resources. For Tesla, continued success depends on strong branding.

The Problem

The issue is that to grow, Tesla has been forced to reduce prices. The company has launched new vehicles at lower price points and reduced prices on existing cars.

This has made Tesla more accessible for the average person.

When the average person can buy a Tesla, what happens? The brand loses its appeal as a marker of exclusivity.

The more Tesla feels like Honda or Chevrolet, the weaker the brand becomes.

Without a unique brand, Tesla is forced to compete on product and price. That is a scary place in the world of electric vehicles when companies like BYD, Geely and others are producing thousands and thousands of pretty good, very inexpensive electric cars.

An interesting problem for Tesla is that the company has always embraced a primary brand strategy. It is just Tesla. The individual vehicles are just model numbers or letters: Model 3 and Model Y. Every Tesla is, more than anything, a Tesla.

This is a naturally limiting brand strategy: a brand can’t be all things to all people.


So, what do you do?

One option is to fight on, battling on quality and price. This isn’t a terrible option. Tesla has momentum and capabilities in this area. It might do fine. The brand has grown dramatically since I first wrote about it in 2015.

Another option is to sell to a larger player. This would create brand portfolio opportunities. If GM owned Tesla, it could position the brand as a premium player. Other brands could fight at the low end, protecting Tesla.

Or Tesla could introduce a new brand. Perhaps the company should have two brands: Tesla as the high-end, premium player, and a new brand, maybe called Elon as the discount brand. This strategy would help Tesla win in both parts of the market.

Looking Ahead

Watch the Tesla brand over the next year. Will the company protect its high-end special brand? Or will Tesla become more like Ford or Chevrolet? Or will the antics of Mr. Musk turn it into a polarizing brand like Kanye West’s Yeezy?

There are big branding choices ahead for Tesla.

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