Download now: Cannabis Cash

All Things Tesla

Building the Brand: Elon Musk's Move for SolarCity

Written by Keith Kohl
Posted June 23, 2016

Say what you want about Tesla, but the company has made it.

“Made what?” you might ask.

Oddly enough, the answer isn't cars... it's still struggling to raise production to commercial levels as it continues to search for consistent funding.

But that's not what I'm talking about.

I mean the company has made it there, to that point in its existence when it owns its unique identity, people know it, and people love it, despite the flaws.

Calling it a household name might be a bit of a stretch just now, but it's certainly one that the majority of people have heard.

And that may make all the difference.

All Things Tesla

Just this year, headlines have dubbed quite a few of these, including the Tesla of electric bikes, the Tesla of motorboats, the Tesla of eco-villages, and of course, the Tesla of showerheads.

Trust me, I can go on for ages.

The point is that everyone wants to be associated with Tesla these days. The brand has become synonymous with innovation, technology, speed, and even risk. So naturally, being referred to as the "Tesla" of your market can get you a lot of attention.

Nikola Motor Company is being hailed as the latest “Tesla of Trucking.”

It's following in Tesla's footsteps in every way it can.

For instance, Nikola is planning to make an electric semi-truck to change the industry, only with a twist: a natural gas-powered fuel turbine that charges the battery pack on the go.

There's nothing else like this on the market, and the Nikola One will be the first of its kind.

You'll also want to note that I said the company was planning a vehicle. Yet even though they aren't currently in stock yet, Nikola Motor Company is taking pre-orders, similar to the way Tesla did for its Model 3.

And at last count, Nikola had taken roughly 7,000 reservations totaling $2.3 billion in revenue.

Okay, I know that pales in comparison to Tesla's 400,000 Model 3 pre-orders, but it's a solid amount, given that the market for semi-trucks is much, much smaller.

Of course, the most obvious ploy to associate itself with Tesla is in the company's name itself: Nikola.

In case you missed that reference, both companies take their names from Nikola Tesla, the man credited with building the foundations of today's alternating current electricity and wireless communications.

Now that the name “Tesla” has earned renown, Nikola is attempting to ride the car company's coattails off into the sunset.

Well, they do say that imitation is the sincerest form of flattery.

But it's also a major indication of Tesla's power. Everyone wants to be part of the hype, which means Tesla has influence over a whole range of industries.

It's a limited influence, but impressive nonetheless.

Risky Business

The problem comes down to the “risk” association. Tesla is known as much for missing deadlines and mysterious funding as it is for its amazing cars.

The biggest show of this problem yet came on Tuesday of this week when Tesla announced its offer to buy its sinking cousin, SolarCity.

Tesla's famous founder Elon Musk was immediately blamed for the idea; he is, after all, a co-founder and chairman of SolarCity. It's obvious why he would want to bring the struggling solar company into the Tesla family.

If the idea of Tesla becoming “the world's only vertically integrated energy company offering end-to-end clean energy products” sounds exciting to you, you should see what shareholders of the two companies thought:

chart1small622

Click Chart to Enlarge

SolarCity saw a bump in share value as the magic of the Tesla brand name took over.

Tesla, on the other hand, sank like a stone. Talk about harsh criticism, even if it is deserved. News reports came out at record speeds, all asking the same thing: does Musk really think Tesla can afford this?

At the very least, SolarCity shareholders got an unexpected First Day of Summer gift to take home.

Musk Madness

Musk himself is known for being ambitious, some would say to a fault.

And yet look at where it's gotten him so far:

  • Founded and sold PayPal, which has become an almost universal online billing system.

  • Founded SpaceX, which is innovating the world's first reusable rockets for orbit.

  • Founded Tesla Motors, which, for all its problems along the way, has sparked a revolution in electric vehicles and energy storage.

Has he bitten off more than he can chew this time? It's possible.

But it's also possible he'll pull through and manage to make Tesla Solar — SolarCity's new name should this buyout go through — into something impressive and immediately profitable.

Until next time,

Keith Kohl Signature

Keith Kohl

follow basic@KeithKohl1 on Twitter

A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.

Hydrogen Fuel Cells: The Downfall of Tesla?