Tesla Motors Inc (NASDAQ:TSLA) has, with little doubt, a good thing going right now. And it only took 10 years. Tongue-in-cheek aside (knowing that building a car company is very difficult, must less to have it still around after 10 years, much less to make it profitable within that time frame), the story of Tesla Motors is a remarkable one, and it may be the kind of story that shines a light on the evolution and transformation of the consumer market nowadays.
Billionaire Elon Musk, the CEO of Tesla Motors Inc (NASDAQ:TSLA) – who made a lot of his money through building companies like Space X and PayPal – had developed a very different business model for Tesla, one that has the entire auto industry not only taking notice, but is flipping it onto its head.
The auto dealership lobbyists have never been so busy, it seems. In at least two states now, Tesla cars are not allowed to be sold to residents of those states (North Carolina and Texas) without a dealership as an intermediary. And there are other states considering similar legislation.
Why would this be such a big deal surrounding a company that is only projected to sell about 20,000 cars this year? Well, it seems that Elon Musk knows the art of word-of-mouth advertising and believes in being consumer-friendly, allowing car-buyers to purchase a vehicle the same way they would buy shoes or shirts or a toy for their child at Christmas: online, without sales people or having to pay for a brick-and-mortar building and the showroom vehicles.
Tesla Motors Inc (NASDAQ:TSLA) is all about word-of-mouth. That is how the company has become an overnight phenomenon without doing nearly the amount of print and TV advertising that competitors like Nissan and Ford Motor Company (NYSE:F) spend. Now, we will be among the first to admit that the world-of-mouth advertising didn’t go viral overnight; it was a building process, but Musk has worked wonders through social media outlets including Twitter, where he has more than 225,000 followers. Only the handful of stores and social media have been the catalyst for the growing popularity of the company and the stock.
Said Tesla Motors Inc (NASDAQ:TSLA) spokeswoman Alexis Georgeson, Tesla has no immediate plans for paid advertising, because it hasn’t needed it to this point. “Right now, the stores are our advertising. We’re very confident we can sell 20,000-plus cars a year—without paid advertising. It may be something we’ll do years down the road. But it’s certainly not something we feel is crucial for sales right now,” she said.
So how is it that this buzz is generated so well, and the stock price has tripled this year?