Tesla breaks into the top 10 most valuable car brands

Jun 11, 2016

Electric auto maker replaces Lexus in highest valuations

Tesla cars are powered by electricity — and a good reputation.

The electric auto maker was ranked the 10th most valuable global car brand — with a valuation of $4.4 billion — by advertising research firms WPP and Millward Brown in an annual report. Tesla displaces Lexus, which was valued at $4.3 million in 2015, for the 10th spot on the list. Valuations are based on future earnings estimates that can be attributed to brand power rather than company actions.

The Tesla brand has maintained a consistent presence in daily headlines in 2016, though not always for positive reasons. The introduction of its affordable Model 3 — which starts at $35,000 before tax breaks and incentives — has attracted about 400,000 preorders thus far, each requiring a $1,000 deposit for a reservation. While the hype surrounding the car’s release could potentially elevate the brand, it also brings up issues such as duplicate reservations and whether the company can complete plans for mass battery production in time for car deliveries.

Tesla cars already on the market have had their own set of problems. Nearly 3,000 Model Xs — the auto maker’s all-electric SUV — were recalled in April for a faulty hinge that could cause the third row of seats to collapse in a crash. On Sunday, one Model X owner claimed the vehicle “suddenly and unexpectedly” accelerated into a house.

However, the ability to innovate within an industry and adapt to competition is a major driver of future brand valuation, according to the WPP and Millward Brown report. Tesla ranked above average in innovation, brand purpose and brand experience, according to a consumer survey conducted by the research firms. “Tesla’s brand equity has grown a lot over the last few years, and while famously not an advocate of traditional above-the-line advertising, the few marketing dollars it does spend have grown noticeably in both value and effectiveness,” the report said.

Most other brands on the list remained unchanged, including Toyota which took the top spot for the fourth consecutive year with a brand valuation of $29.5 billion. Volkswagen was dropped from the list after the company was discovered to have been lying about the emissions of its diesel-fueled vehicles, but the company’s Porsche brand broke into the top 10 with a valuation of $4.4 billion.

The report also ranked the top 100 global brands, with Google and Apple topping the list at $229.2 billion and $228.5 billion, respectively. Facebook and Amazon entered the top 10 after ranking 12 and 14, respectively, in 2015. The report cited Facebook’s original content publishing and Amazon’s built-in logistics network that allows for convenient delivery as ways the brands have increased their value to consumers.

Source: MarketWatch