By Darrin Duber-Smith
They make pretty cool cars, and that Elon Musk is one heck of a marketer, but the fact of the matter is that Tesla has been an unprofitable maker of very expensive electric cars for well over a decade, and has failed to meet almost every production deadline in its history. Various government incentives make the vehicles far cheaper than they would otherwise be, which means that for all practical purposes, the company would be insolvent if left to market forces.
But governments simply love electric cars even if the vast majority of consumers do not, but Tesla has nevertheless managed to gain a fairly good-sized following of late, especially after marketers announced the introduction of a lower-priced model, which garnered lots of pre-orders. The problem is that the company has a problem with delivering on its promises, and this time is no exception.
Indeed the company has made only a fraction of the promised Model 3's that are expected to satisfy hundreds of thousands of customers, which certainly surprises no one here at KnowNOW! Marketing Headquarters, longtime critics of Mr. Musk and his largely outsized ideas, but this sort of thing should start to concern the folks who are expecting actual results, namely shareholders and customers.
Reports that Tesla is producing cars by hand rather than on production lines have shed light on the issue. Mr. Musk warned his acolytes several months ago that they were entering "production hell", but at the rate of three cars per day, it is highly unlikely that Tesla will satisfy even a fraction of the promise it has made to its fans. But these fans have historically been a forgiving bunch, and remind us at Headquarters of the overwhelming zeal Apple "fanboys" of yesteryear once had for Apple products they considered to be "innovative". Well, that's kind of over, although pockets of resistance remain. But at least Apple delivers on its promises, and every student of marketing learns that it's best to under-promise and over-deliver, preferring to delight the consumer rather than disappoint. Tesla? Not so much. But it does appear that rising demand for electric vehicles in the future will largely be driven by the legal and regulatory environment as governments large and small continue to subsidize this industry that still comprises less than 1% of the car market.
Why is it important is it for marketers to under-promise and over-deliver? If Tesla often fails to deliver on its promises, then why is the brand so well-regarded by so many consumers and almost everyone in the media? In light of the tax subsidies available for electric vehicles, what is government's role in driving demand for a product category?
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