Tesla and Nikola are both companies that produce electric vehicles, and both companies are named after the inventor Nikola Tesla. It seems to me that this could cause confusion. Does either company have grounds to sue the other for trademark infringement?
It wouldn't be frivolous, but I doubt either party could prevail in a trademark suit
The test to use for trademark infringement is a set of factors known as the Lapp factors.
[L]ikelihood of confusion for both competing and noncompeting goods should be tested with reference to the following:
the degree of similarity between the owner's mark and the alleged infringing mark;
the strength of the owner's mark;
the price of the goods and other factors indicative of the care and attention expected of consumers when making a purchase;
the length of time the defendant has used the mark without evidence of actual confusion arising;
the intent of the defendant in adopting the mark;
the evidence of actual confusion;
whether the goods, competing or not competing, are marketed through the same channels of trade and advertised through the same media;
the extent to which the targets of the parties' sales efforts are the same;
the relationship of the goods in the minds of consumers, whether because of the near-identity of the products, the similarity of function, or other factors;
other facts suggesting that the consuming public might expect the prior owner to manufacture both products, or expect the prior owner to manufacture a product in the defendant's market, or expect that the prior owner is likely to expand into the defendant's market.
Let's take a few of these.
- the degree of similarity between the owner's mark and the alleged infringing mark
Low, but non-zero. They're facially completely dissimilar: the words sound and look nothing alike, and their logos are completely different as well in both design and color. The only similarity is that they are both parts of Nikola Tesla's name. The USPTO gives as an example "LUPO" and "WOLF" being similar, "because, when the Italian word 'LUPO' is translated into English, it means 'WOLF.'" However, in that example, the words have identical meaning in different languages. Overall, this seems to weigh against infringement, as neither company is associated with the actual person, and Nikola is a common given name.
- the strength of the owner's mark
Tesla's is quite strong: they're quite prominent. Nikola probably less so. Would weigh in favor of Tesla in a suit.
- the price of the goods and other factors indicative of the care and attention expected of consumers when making a purchase
Extremely high: the Tesla and Nikola trucks start at ~$40k and $60k, respectively. This weighs against infringement, as consumers are unlikely to make such an expensive purchase hastily.
- the intent of the defendant in adopting the mark
Both chose the mark to pay homage to Nikola Tesla. Per the same case, "defendant's intent will indicate a likelihood of confusion only if an intent to confuse consumers is demonstrated via purposeful manipulation of the junior mark to resemble the senior's." None appears clear here, which does not support infringment.
- the evidence of actual confusion
I couldn't quickly find any. I'm sure a lawyer would search more thoroughly, but this seems to weigh against infringement.
whether the goods, competing or not competing, are marketed through the same channels of trade and advertised through the same media
the extent to which the targets of the parties' sales efforts are the same
These are probably pretty similar. Would weigh in favor of infringement.
As with any balancing test, it's a bit of a guessing game how a court would weigh the factors, but given the low similarity, high price, and lack of evidence of actual confusion, I find it unlikely that a court would find either party has infringed the other's trademark.
It seems to me obvious that while that might cause confusion outside the legal community, still your premise is flawed.
I don't think confusion in the ordinary sense comes into this kind of Question.
Take for example WH Smith and Smith & Nephew, Smiths Group plc and Smiths Industries.
I think confusion in the ordinary sense might very well conflate all those Smiths but legally, not only every word but every letter matters.
As a silly equivalent, when I as 'Goodwin' was in the military it was clear that I had no duty to respond to any order addressed to 'Godwin' or 'Goodwyn' however clearly any other details referred to me. I might have have had ethical or moral duties to ask what this was about, but not legally to obey…