Tesla shows how innovative partnerships pay off

Electric car maker employs creativity in marketing, infrastructure initiatives

As China struggles to meet its target to put hundreds of thousands of new energy vehicles on the road by next year, American electric car maker Tesla has made remarkable progress selling its electric vehicles, despite arriving late to the market. The company has succeeded through a smart combination of savvy marketing and clever initiatives to build the infrastructure to support its customers.

In its latest initiative, Tesla announced a partnership last week with China Unicom, the country's second-largest mobile carrier, to install charging stations at hundreds of the carrier's stores nationwide. As a result of these and other efforts, Tesla has been the lone electric car maker to succeed in China's consumer market, an area that will be critical to achieving Beijing's goals.

Other Chinese aspirants like BYD, SAIC and Geely would be wise to follow this example by allocating big funds to forge partnerships and create similar marketing campaigns to convince Chinese consumers that electric vehicles are not only good for the environment, but also convenient to drive.

Beijing has been pushing hard to put more new energy vehicles on its roads, in a bid to clean up the country's air and develop new technologies. Yet, despite generous subsidies and other incentives, there are currently only about 78,000 such vehicles on the road - far less than the 500,000 that Beijing had originally targeted for 2015.

A big portion of those are buses and taxis purchased by local governments and other State-owned enterprises, whose decisions are often as motivated by politics as economics.

What's really needed to jump-start sales is the development of the consumer market. Just last week, Beijing announced yet another round of incentives to attract consumer buyers, saying it would exempt 17 models of new energy cars from the sales tax. The measure complements existing direct subsidies that are already available to buyers of such vehicles. But consumers remain wary, not only because of high prices but also over image issues and lack of supporting infrastructure.

Tesla's success stems from the vision of its founder, Elon Musk, who realized that special marketing would be needed to get consumers to accept electric vehicles. He realized such cars are seen as experimental technology that often comes with problems, and that consumers would worry about a lack of infrastructure like charging stations and maintenance facilities.

The company proceeded to tackle the problem by targeting the high end of the market, selling cars with a starting price of $70,000. Targeting wealthy consumers allowed the company to use the most advanced and reliable technology, and also to market itself as an elite brand.

That strategy has worked well in status-conscious China, where Tesla only began taking orders last year and made its first high-profile delivery in April at an event that coincided with the nation's largest auto show. At that time, the company embarked on a slick campaign highlighting its state-of-the-art technology, combined with a trendy angle that appealed to people wanting to become the first to own the latest cool and expensive gadget.

As a result, a number of China's high-profile elite were among the first to sign up as buyers, including the owner of the Lifan soccer team and the founder of Autohome, China's largest auto website. Musk further boosted his company's profile by holding high-profile events where he personally delivered cars to their new owners, creating buzz through a slick campaign that was widely followed by domestic media.

Since then the company has worked hard to maintain its momentum and build up its order book, with the aim of selling thousands of cars in its first year. In its latest initiative, Tesla and China Unicom will build charging posts at 400 China Unicom stores in 120 cities, as part of Tesla's broader commitment to spend hundreds of millions of dollars on such stations in China.

This kind of high-profile announcement, combined with its previous savvy marketing campaign, is helping Tesla succeed despite an arrival to China that's already several years behind more aggressive domestic competitors. Some of those companies, including BYD and Geely, should think hard about making larger investments in high-profile marketing and infrastructure campaigns if they hope to succeed in the consumer market.