Mathony Brand Strategists: New Tesla

December 09, 2017

Two reasons for Tesla and NIO to skip IAA – and why this is smart Marketing

China is the world’s second biggest economy – nonetheless it only has two players on Interbrand’s Best Global Brands list: Huawei @ No. 72 and Lenovo @ No. 99. Visiting the Shanghai Auto Show in April I sensed that this might change soon: Automotive is the fastest growing sector in China with their brand value increasing by 76%. For a Western Marketer there were many unfamiliar brands. Everything seemed gigantomaniac: the size of the National Exhibition and Convention Center – with four million square feet one of the largest buildings in the world –, the number of car manufacturers exhibiting to the branding efforts etc.

My three take-aways from Shanghai:

  1. Connected and automated driving, electric mobility plus urban mobility concepts are the megatrends nobody can neglect.
  2. Underestimating China in this context would be a big mistake. According to McKinsey, 43% of the 873,000 electric vehicles (EV) built worldwide in 2016 came from China. Germany and the US accounted for 23% and 17% respectively.
  3. Consequently the needs for a changed Marketing mix.

In the media – and at the stock exchange – Tesla is eliciting the hype factor, but a time may come where this will be around NIO, the Chinese-Silicon Valley mashup designing smart autonomous EVs. Founded three years ago from the internet billionaire William Li, the startup is based in Shanghai with offices in Munich and San Jose. In the US it is led by Padmasree Warrior as CEO and Chief Development Officer. Forbes calls her ‘the queen of electric car business’. NIO has attracted major investors: Tencent and Baidu led an $87 million funding round this March. Sequoia Capital and Lenovo are also invested. To date NIO has raised nearly $1 billion and is valued at $2.9 billion.

Visiting their booth in Shanghai was eye opening: Exhibited were two NIO Formula E race cars, seven NIO EP9s, one of which has the record for fastest electric car in the world, and their vision car EVE. Seeing the smashing products draw me to their website. It features all Marketing musts: a stringent showcase of the brand ecosystem with customers and their needs at the forefront plus a language reflecting a purpose-driven organization; i.e. not a boring graveyard of product details in a replaceable corporate language. Their Chinese name,‘Weilai’ means ‘Blue Sky Coming’ which is mirrored in their logo. The top is about the sky, openness, vision, the future. The bottom part is about the earth, direction, action and forward momentum.

Why IAA is not the only killer app … but also PR tactics like the use of owned media, earned media and a strong brand identity

When Germany’s biennial International Motor Show (IAA), the world’s largest motor show, opens today eleven major OEMs including Fiat, Volvo, Mitsubishi, Rolls-Royce etc. – plus Tesla – will be missing. “Despite all the buzz, the year’s most-talked about car will be conspicuously absent”, criticized car guru Ferdinand Dudenhöffer – referencing to the EV Tesla 3. For Tesla it is only logic to not come to Frankfurt stating “We’re not a traditional carmaker”.

Tesla claims to have

’no Marketing Budget, no advertising, no ad agency, no CMO.’

Other brands might have other reasons for their no-shows searching for more innovative and less costly ways. Sales markets have changed, new Marketing channels are more appealing and sometimes simply money is missing. According to the price list of the organizer VDA (Association of the German Automotive Industry), a square meter exhibition place costs 166€, which easily sums up for large OEMs in rents of two million Euro – without costs for booth, staff and crazily prized hotels.

Overall the relevance of large auto shows has changed: “Car shows, like cars, need to keep reinventing themselves,” suggested Matthias Wissmann, chief of Germany’s VDA auto industry federation. An interesting example for this might be the me convention under the claim ‚enable yourself to #createthenew‚ from Mercedes-Benz – an international lineup of 150 pioneers, thought leaders, adventurers, artists and game changers including Sheryl Sandberg.

Especially small to mid-size OEMs allocate their Marketing budgets more wisely. Social media like Twitter and Facebook, online campaigns and digital advertising formats are more suitable for them to reach customers worldwide. Only logically Tesla-CEO Elon Musk, ranked 21st on the Forbes list of most powerful people in the world, loves Twitter. With more than 7 million followers, Musk’s tweets get retweeted, creating in turn a lot of buzz on social media. The buzz generated on social media forces media outlets to cover the stories. That way, owned media becomes earned media. In line with this, Tesla’s ad budget is tiny: According to a report from Global Equities Research, Tesla spends $6 per vehicle on advertising. The next lowest spending company is Toyota, spending $248 per vehicle.

Screening the press after Shanghai revealed dozens of articles about NIO. These news outlets’ stories implied a third-party endorsement for this Chinese start-up. People around the globe saw the news outlets’ stories about NIO, and the news stories generated even more interest for the new brand without even one dollar spent on advertising.

Net-net: the two reasons why Tesla and NIO are skipping IAA 2017 is saving money but at the same time unlocking their marketing potenial for free. There might be a lesson that traditional OEMs could learn from them and implement as brand strategies. It is bold experimentation and rapid iteration to identify and create innovation opportunities and ensure agility. Fearlessness in Marketing makes absolute sense or – how Stuart Green puts it:

“Enterprises require constant self-subversion to achieve innovation-driven success.”

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