Thompson: Tesla Brand Is Key To Model 3's Success

Despite the fact that General Motors Company GM will be the first to put out an electric car in the $30,000 price range and the Model 3 could easily end up rolling out at a later date and at a more expensive price than current estimates, Stratechery’s Ben Thompson believes that the success of the Model 3 ultimately lies with the strength of the Tesla Motors Inc TSLA brand.

Thompson compares Tesla’s brand strength to Apple Inc. AAPL's and the potential frustrations of GM to those of other smartphone makers who were trying to compete with Apple making high-end phones.

“The real payoff for Musk’s ‘Mater Plan’ is the fact that Tesla means something; yes, it stands for sustainability and caring for the environment, but more important is that Tesla also means amazing performance and Silicon Valley cool,” Thompson said about the Tesla brand.
 

Related Link: Tesla Model 3 Social Sentiment Almost 'Exclusively Positive'
 

This reputation will be critical for both GM and Tesla, and Thompson believes it will ultimately be responsible for the failure of the Bolt.

“Brand and reputation matters far more than being ‘first’ to a product category where every model on the market has fallen short of expectations – except for Tesla,” he writes.

He adds that Tesla was given the priceless advantage of a clean slate in the mind of consumers, and the fact that Tesla could build its reputation from scratch and has executed on that reputation well up to this point gives it a huge advantage over GM.

Once you have the reputation built, much like Apple, you can do no harm in the eyes of irrational consumers.

“Tesla will likely receive similar grace when and if the Model 3 comes in late and over its promised price,” Thompson concludes. “After all, it will still be a Tesla.”

Disclosure: the author holds no position in the stocks mentioned.