There's a funny story behind how Tesla named the Model 3 - but the branding is now causing some problems

Like anything Tesla CEO Elon Musk does, the naming of Tesla's newest sedan was very deliberate.

The Model 3 is simply the latest iteration of a naming strategy Musk has been planning for years: to launch a car line that spells "SEXY." The Model 3 has taken its rightful position as the "e" and Tesla's upcoming Model Y will complete his naming plan.

Musk originally wanted the Model 3 to be called the Model E, but Ford beat Tesla to the punch in filing for the trademark. 

Needless to say, Musk wasn't thrilled about Ford snagging the name. 

"Like why did you go steal Tesla's E? Like you're some sort of fascist army marching across the alphabet, some sort of Sesame Street robber?" Musk said at the time. 

While the origin story of the Model 3 name is funny, the branding has also become a thorn in Tesla's side.

Long-time Tesla fans may know about the joke, but not all potential buyers are up to speed.

The name led some to believe that the Model 3 is a next-generation version of the Model S. That's problematic considering the Model 3 is Tesla's first mass-market sedan and has far fewer bells and whistles with a $35,000 price tag.

Tesla has been so concerned that people are confused by the Model 3 name that it wrote in early May about the need to correct the misperception in a Securities and Exchange Commission filing. Musk made similar comments on Twitter in March.

Tesla designed a webpage to help correct the confusion, which appears to be paying off.

The company said in its second-quarter earnings letter that there has been growing demand for the Model S and Model X. It's unclear whether that's from Tesla's different marketing approach, but it shows demand isn't waning for Tesla's luxury options just because the Model 3 launched.

Tesla releasing the final specs for the Model 3 also doesn't hurt.

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