This is according to Reuters, which reports that the company is contradicting earlier boasts by CEO and co-founder Elon Musk and his executives that the company saves its marketing dollars by relying on earned and organic social media, by reinvesting in product development. In China, at least, Tesla is now changing its tune.
The company is attempting to expand its communications focus in China beyond just marketing products and toward a longer-term service offering, in part through a driving school. Its head, Leo Liu, tells the news agency that Tesla’s aim is to help people “make full use of their cars”.
Moreover, it is establishing premium experiential marketing efforts. Among them are racing events and track days, as well as DJ-soundtracked parties in showrooms, in partnership with Tencent’s QQ music. Other efforts are digital, with the emergence of a line of stickers to be used in various popular chat apps – a popular tactic with other auto makers too.
Though the company continues to eschew traditional media buys in the form of posters or TVCs, its Chinese division is developing strategies that will grow the brand.
Its events are pitched toward automotive journalists as well as influencers (often called Key Opinion Leaders in China) and a select group of owners. The company has so far held three events, one in Beijing and two in Shanghai. It plans to expand to other large cities in the near future. Liu added that it will invite more owners as time goes on.
The company has been exporting to China since 2014. A significant chunk of its revenues come from the country, where it is seen as a leading brand in the electric car category. The February launch of the cheaper Model 3 in the country is credited with increasing revenues in China by as much as 42% in the first half of this year.
Not only is China the largest potential electric car market on the planet, it is the location of a major Tesla factory, which, once operational, will churn out around 3000 Model 3 cars every week. This is slated to increase when production of its new long-range Model Y vehicle.
Musk, who recently visited the country, appeared to have come away with a favourable deal following a meeting with China’s transport minister, Li Xiaopeng. Later in the day of the meeting, China announced a 10% purchase tax exemption. According to Bloomberg, this is a perk typically extended only to domestic manufacturers of electric cars. It is especially notable given the increase in tariffs on American cars that will land in December of this year.
It’s important to remember Tesla’s direct sales model, which is a significant departure from the typical franchised dealership model of other marques. This way, the company not only controls the experience but also owns the channel touchpoints and data, leading to potential advantages for new product development.
The company is adjusting to China in a novel way, opening itself up in a way that contrasts oddly with its reputation of relative silence in the US. “We have to learn how to manage a larger sales and after-sales system as production is growing to a completely different level,” one unnamed source told Reuters. “That’s why we’re doing these events now.”
Sourced from Reuters, WARC, Bloomberg