What A Successful Tesla IPO Would Mean: Branding Is Everything

Electric vehicle startup Tesla’s IPO-filing last Friday provided industry-watchers with the first real glimpse behind the company’s hip brand and high-profile PR. What they saw wasn’t as pretty as the image: a company that’s lost $236.4 million, sold less than 1,000 cars, and will lose many millions of dollars more as it retires its current generation Roadster next year and strives to produce the more mainstream and lower cost Model S.

If investors actually respond positively to Tesla’s public offering, to me, it will mean that in this media-saturated day and age, branding is truly everything. The hip silver (and green) brand, and the company’s claim to fame of being “the first, and currently only, company to commercially produce a federally-compliant highway-capable electric vehicle,” according to its S-1, will have completely outshown investor’s natural instincts to back companies that will be able to generate sustainable profits in the near term.

Tesla’s vision — to use an EV sports car to create mass appeal — is such an utterly cool concept that despite a lot of ups and downs at the company (from the founders feud, to months and months of delays of the Roadster, to layoffs, to slapping Roadster customers with charges for previously standard features, to recalls) most are still rooting for the company to make it.

The company does very little advertising, and has used word-of-mouth and media appearances to create a brand that Ad Age recently declared one of America’s Hottest. Tesla referenced its “Brand Leadership” in its S-1 as one of its competitive strengths — to me it seems like it’s by far and away it’s biggest strength.

But the problem with brands is that they can also be vulnerable. One incident with a battery that blows up, or too long of a delay in production of the Model S, could seriously handicap Tesla’s brand and thus its future. And as Business Week points out when Tesla’s Model S comes out there will be many more competitive brands out there. Nissan will have its Leaf on the market, General Motors will be selling the Chevy Volt and there will be a plug-in version of the Prius. Tesla’s best bet for a successful IPO at this point is to just to maintain its stellar brand, but then again, there’s that whole quiet period ahead.