From Ford Model T to Tesla Model 3: the beginning of a new era?

In 1908,  Henry Ford launched the Model T, and this product and the moving assembly line are generally accepted  as the driving force that started an industrial revolution. According to Tidd and Bessant (2013) “Ford did not invent ‘mass production’ but his efforts around the Model T ushered in the era in which this mode of thinking predominated. It’s possible to think of innovation taking place along several different dimensions – the ‘four Ps’ of ‘product’, ‘process’, ‘position’ and ‘paradigm’.”

  1. Product innovation – involved rethinking the design of the car.
  2. Position innovation – involved rethinking the target market for the product.
  3. Paradigm innovation – a revolution in thinking about the car as product and the manufacturing process which would deliver it. It required a change at the level of the whole system of product, process and market.In the case of Ford, his underlying business model was essentially one of low cost, high volume producing for a mass market. In the case of Tesla, we observe a hotbed of automotive innovationt
  4. Process innovation – the key to realising the new paradigm lay in process innovation – how the car would actually be built.

With the Model T and the popularisation of the car an era began in the automotive industry, and the power behind this era have an origin: fossil fuels. Fast forward a hundred years, and in 2008 with the introduction of Tesla’s Roadster, the electric vehicle industry (EV) was reborn, but not exactly for too many individuals: The Roadster was a car targeted at the high-end market. However, on March 31st, Elon Musk unveiled the Model 3, an affordable car for the masses. There is justifiable optimism that the time of the EV, as a viable concept for millions of people, has finally arisen.  And, as Victor Hugo said, nothing is so powerful as an idea whose time has come.

The Model 3 presents a series of innovations from a product standpoint, but I´d like to focus on Tesla´s marketing innovations because, in a sense, Tesla follows the path of Red Bull as a new marketing powerhouse with all the buzz around it. For me, some of the key ingredients of this new power brand are its Purpose Positioning, its Challenger Image and the brand´s Leadership Role, which, together, create all the expectation and excitement we saw in the last few weeks.

  • Purpose Positioning: Not all brands can have a purpose, not least a relevant one, but it´s clear that Tesla is trying to build a business in a purposeful way, around an idea (innovation in transportation using electricity) that clearly inspires customers, employees and other stakeholders. The promise of a new world.
  • Challenger Image: By circumventing dealers and selling directly to consumers, Tesla, as this article from the MIT Review highlights ,”has introduced not only a new technology, but also a new product architecture and a new business model”. The level of emotional associations with the brand starts to resemble very much to Apple´s and its “Think Different” motto. And behind all this image is the idea (the purpose) of a world hydrocarbon-free world. Dreams always sell. And of course, you have this image backed by the heritage of a name such as Tesla, arguably one of the greatest geniuses and innovators of all times (and very controversial as well).
  • Leadership Role: Another aspect comparable to Apple is Elon Musk´s persona. Clearly, he does not have the same public speaking skills and charisma as Steve Jobs had as you can see in the video, but  he personifies the brand and has become a star in the business scenario. Musk is not Branson either, but we have a new kid in town when it comes to be a “product champion”.

With an obvious in-bound marketing strategy that is built around these ingredients, Tesla´s Model 3 is enjoying a healthy start:  more than 325,000 pre-orders were taken for the car in the week following of its reveal. Not bad for a car that will be delivered, hopefully, in the end of 2017. Is that the end of the the gasoline-powered cars? Of course not, perhaps it´s just “hysteria” as Forbes puts it. But, the same article observes that Tesla is a result of  a grassroots movement among US environmental-conscious and tech-savvy customers in the US- and we should pay attention to such societal movements, after all, Barack Obama was the result of a grassroots phenomena, either.

Powered by branding, innovation and digital technologies, little by little, it is possible that Tesla gains momentum as a serious contender, and one day electric cars will go mainstream. In some years, it can happen to electrical cars the same that occurred with the ethanol-powered cars in Brazil. In the 80s, an advertising campaign used to say “one day you will have one” to persuade drivers to buy the cars powered by ethanol. Today 70% of Brazilian car fleet is flex-fuel, using ethanol and gasoline. Perhaps, Victor Hugo is right, and the time of the EV has come.

More on Tesla marketing in this excellent post.

Leave a Reply

Your email address will not be published. Required fields are marked *