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Teslaquila is actually a good idea!

This Week in Elon
Teslaquila is actually a good idea!
By Elizabeth Lopatto • Issue #12 • View online
“Teslaquila” started as part of an April Fools’ Day joke — a troll holiday celebrated only by amateurs and engineers. (Amateurs usually aren’t funny and engineers have a very specific sense of humor. But as engineer humor goes, “There are many chapters of bankruptcy and, as critics so rightly pointed out, Tesla has them *all*,” is pretty damn funny.)  
Anyway, Musk posted a photo of himself propped up by a Model 3, saying he’d been found “surrounded by Teslaquila bottles.” Later, he filed a trademark for Teslaquila, and he says it’s “coming soon.” Which makes it a lot like the other merchandising efforts Musk has made via The Boring Company. First, The Boring Company sold hats. Then in December, Musk said that after 50,000 hats, he’d sell flamethrowers. Those 50,000 hats, sold for $20, brought in revenue of about $1 million for The Boring Company. The 20,000 Not A Flamethrowers he sold next, at $500 a pop, brought in about $10 million — in just six days. There’s a Musk merch market!
Also, merch is normal for high-end automakers — BMW sells hats, thermoses, luggage, and… $61 golf balls. Porsche created its own subsidiary for merch, and sells everything from quilted jackets to Porsche Design-branded Huawei phones. Ferrari sells hats, driving gloves, $42 keychains and, uh, $55 earbuds. But if the Ferrari keychain seems expensive to you, you should definitely check out the Maserati keychain, which retails at $163.
You don’t have to be able to afford a BMW, a Ferrari, or a Maserati to buy the merch. And you don’t need to be able to afford a Tesla to buy Teslaquila. You can participate in the lifestyle brand without the expense of the car!
Tesla does have its own accessories shop, where you can buy men’s and women’s apparel — though not, as of now, short shorts. Also for sale are $250 toy versions of the Model S, $25 infant onsies, and a $35 Starman mug. There’s an interested market for Musk-related collectables, and depending on what’s sold, the margins on merch could help boost profits. I emailed Tesla spokeswoman Gina Antonini about Tesla’s tequila plans, but she didn’t reply by my deadline, sadly.
Drunk-driving optics aside, selling tequila is smarter than keychains or hats. I mean, I’m still using the free keychain I got more than a decade ago because it still works! Booze, on the other hand, exists to be consumed, and then, if it’s good, you buy more. It’s a more reliable income stream than other accessories — except, possibly, golf balls, which one expects to get lost or destroyed. (Golf balls!)
So: tequila. Tequila, a type of mezcal made exclusively from blue agave, is made in Mexico but primarily consumed in the US, says Kara Newman, the spirits editor for Wine Enthusiast. Since 2002, tequila sales have more than doubled, according to The New York Times, in part because tequila has found some celebrity connoisseurs.
Celebrities don’t just drink tequila, either — they make it. Sammy Hagar’s Cabo Wabo tequila went for almost $100 million in 2007 and 2009, when he sold to Campari in two transactions. (Hagar, who replaced living legend David Lee Roth in Van Halen, has since created a mezcal / tequila blend with Adam Levine of Maroon 5.) Last year, Diageo bought George Clooney’s tequila brand, Casamigos, for $1 billion. Justin Timberlake has Sauza 901, made with Casa Sauza; Diddy has DeLeón; AC/DC has Thunderstruck Tequila. Celebrity tequila “is officially a thing,” Newman says. “It’s like a gold rush,” says Mike Morales, the CEO of Tequila Aficionado Media.
Not all of these brands have hefty personal involvement from the celebrities in question; while Clooney reportedly spent two years searching for the right tequila, other celebrities just put their names on brands — much like in the celebrity perfume industry, Newman says.
Distilleries called maquiladoras — some of which produce award-winning tequilas — produce tequilas for brand owners, says Morales. If I were to try to make Ride the Lightning Tequila, a tequila for dirtbags, I could go to one of these distilleries and they’d take my money and show me different styles of tequila. I could give them an idea of the flavor profile, they’d make a recipe just for me, and then I’d come up with labels, logos and a marketing plan. “A process like this, done right, in paperwork alone can take anywhere from two years to five years on both sides of the boarder,” Morales says. Money can expedite paperwork, though — and if Musk expedites his paperwork, we could see Teslaquila as early as the first quarter next year, Morales says.
What interests me about Musk’s tequila, though, is that it fits with another pattern in his businesses: doing the hard thing. “I’m not sure why he’s going after tequila,” Newman says. “It’s a crowded marketplace for a scarce commodity.” Another spirit, like vodka, would likely be easier, since vodka can be made out of virtually anything. Tequila, however, must be made from blue agave, which has a long grow time (at least seven years) and must be aged; vodka doesn’t require aging time.
There are also headwinds in the tequila industry. The most obvious one is agricultural: since agave producers have to guess what the demand will be for their plants seven or so years in advance, producers haven’t been able to keep up with the uptick in demand, Reuters reported in January. “The industry is in trouble,” Morales says. “There’s going to be a shakeout. Right now it’s a difficult, difficult market.”
Plus, tequila isn’t necessarily environmentally-friendly. For every liter of tequila you produce, there’s 10 liters of wastewater, Morales says. Some tequila-makers just dump this wastewater, which “smells horrible,” Morales says. “It’s a crisis: where are we going to put the crap when we’re done with it?” Morales hopes that Musk will disrupt the tequila industry, in part by handling his wastewater responsibly. “The industry needs to be turned on its head.”
Then there’s the trade war — it’s not just for China, where Tesla recently purchased ground for a new Gigafactory. Donald Trump’s hostile rhetoric toward Mexico has a number of tequila producers trying to find a non-US market for their products, Newman says.
The optics on a car company selling tequila are a little weird, though that doesn’t mean that Tesla will be liable if customers choose to drink and drive. “Unless there’s a suggestion (in marketing or otherwise) that the two products should be used together or go hand in hand, I don’t see any liability implications,” says Nora Freeman Engstrom, a Stanford Univesity law professor, in an email. Steve Sugarman, a professor at the University of California Berkeley’s law school, agreed. “Any alcohol company has to worry about irresponsibly marketing alcohol and any car company has to worry about irresponsibly marketing cars,” he says. And Tesla, you may remember, doesn’t make ads at all.
Incidentally, alcohol companies love the notion of self-driving cars; and Tesla’s goal, obviously, is to get to a self-driving world. Should Tesla get to full automation — where a steering wheel is unnecessary and the driver never has to intervene — Tesla owners could drink Teslaquila while riding. “That’s like drinking tequila in the back seat of the taxi,” Sugarman says. “You’re not in charge of the car, so maybe in the future you could do drinking when you aren’t really driving.”
So, like a lot of Musk’s projects, Teslaquila is tough but not impossible. And as branding tie-ins go, it’s definitely hipper than golf balls. That matters, too — because the accessories you sell say a lot about who your consumers are. Tesla’s marketing pitch is that its cars will help save the world and look good doing it. Perhaps Teslaquila will help you feel good while you do it, too — as long as you don’t drive your Tesla after you’ve imbibed. In any event, I am really looking forward to doing a taste test, ideally while in my best Pee Wee Herman drag.

Let’s see how the finance people are doing! (Incidentally, if you are a Twitter user who enjoys eating popcorn while other people feud, I’d like to direct you to Charlie Gasparino’s Twitter feed. Gasparino, a fanny pack connoisseur who is the walking definition of “bridge and tunnel,” has been in a hilarious slapfight with Tesla short Twitter. ) Oh, one more thing: a judge approved Musk’s settlement with the SEC, so that’s all over now.
Tesla needs over $1 billion in cash over the next 6 months, and Wall Street is going nuts figuring out where it's going to come from
Tesla Through the Lens of Apple
Elon Musk plans to buy another $20 million in Tesla stock
Manufacturing fun and games — a VP leaves, a Tesla gets torn apart, and battery-swap technology is revisited. Meanwhile, in Palo Alto: the future electric car proponents want is already here. Plus: the tax credit is ending (though various competing bills are being introduced right now to alter the tax credit, so stay tuned I guess).
    Tesla's VP of manufacturing, Gilbert Passin, is out: source - Business Insider
Tearing Apart Teslas to Find Elon Musk’s Best and Worst Decisions - Bloomberg
The Faster, Cheaper, Better Way to Charge Electric Vehicles | WIRED
Palo Alto is living the electric dream
Tesla promises all cars ordered by October 15th will qualify for $7,500 tax break - The Verge
Why you can't buy a Tesla in some states
The Dirt on Clean Electric Cars - Bloomberg
Tesla launches new Model 3 with 'mid-range' battery for $45,000, changes pricing structure - Electrek
SpaceX was pretty chill this week — except, of course, for Elon Musk’s visit to the White House; it was reported after last week’s newsletter went out.
Elon Musk makes little-noticed visit to White House
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Elizabeth Lopatto

This Week in Elon is a segment on The Vergecast hosted by Deputy Editor Elizabeth Lopatto and now available as a limited-run newsletter. If you want all of the dizzying news about Elon Musk and companies delivered to your inbox on Thursdays, subscribe!

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