In Tesla’s Texas Gambit, Branding Is Key

Carmaker, space cowboy, and internet provider Elon Musk has officially thrown his hat into the Texas electricity ring. Tesla Energy Ventures, a subsidiary of Tesla, was authorized by the Public Utilities Commission earlier last month to provide retail electric services throughout the area serviced by the Electric Reliability Council of Texas.

The company is uniquely positioned to thrive in Texas. Many electricity providers do not generate their own power, but instead purchase energy on the wholesale market and then sell it to consumers. Tesla, on the other hand, has already begun construction of a massive battery in Angleton, Texas, that aims to contribute 100 megawatts of energy storage to the Texas power grid. 

While it has built several utility-scale energy storage systems around the world, including one in California, Texas is the first region in which Tesla plans to both generate and sell electricity. To do so successfully, Tesla will first have to sell itself as a trustworthy innovator in a state beleaguered by unreliable power systems.

Widespread outages caused by Winter Storm Uri brought renewed attention to the state’s tenuous energy infrastructure and highlighted the importance of strong branding around community engagement efforts. Texans remain keenly aware of the precarious state of the power grid and are unlikely to risk switching to a provider that hasn’t earned their trust.

A 2017 study conducted in the aftermath of Hurricane Harvey found that half of all customers in the Texas market preferred to do business with the 10 most trusted brands identified by their research, and 40% of customers said they would stay with their provider even if they could save money by switching.¹ Of the 53 companies included in the study, those with the strongest community outreach were found to be more successful at customer acquisition and retention. 

Musk has proven himself a talented marketer. Over a period of almost two decades, Tesla Motors transformed from a small electric car manufacturer into a trillion-dollar company². Rather than treating its electric vehicles as an option, in the style of traditional car manufacturers, Tesla positioned itself as an exclusively electric car company. And, just as importantly, it reimagined the sustainable lifestyle as both eco-conscious and luxurious.

If Tesla can leverage the strength of its existing brand identity while tailoring its messaging to outage-weary Texans, it has a good chance of carving a niche for itself in the Lone Star State.

Sources:

  1. https://www.businesswire.com/news/home/20170907005104/en/Top-10-Most-Trusted-Texas-Retail-Electric-Providers-Brands-Revealed
  2. https://fortune.com/2021/10/25/tesla-market-cap-passes-1-trillion-first-time-apple-microsoft-facebook-amazon-alphabet/

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