It’s the end of an era at Tesla, and the beginning of a new chapter.
Until now, the automaker has distinguished itself from its competitors by not advertising its cars. The Austin, Texas-based automaker relies on word of mouth from its fans and CEO Elon Musk’s eccentric and populist personality to promote its products.
In 2022, Tesla will deliver 1.31 million vehicles. The car group achieved all this without any of its models ever appearing in a TV commercial. Tesla simply does not have a marketing and advertising department like its competitors General Motors or Ford. Basically, the group spends $0 on paid advertising to sell its cars.
We don’t buy ads.
Musk and his company’s marketing strategy has always been focused on buyers of his cars. Tesla focuses on the human-centered customer experience. Basically, the automaker invests a lot in research and development (R&D) to develop products that are supposed to improve drivers’ experience.
This strategy works well. For example, Full Self Driving (FSD), Tesla’s $15,000 driver-assistance system, is the subject of much discussion on social networks, with users praising its benefits with every update.
“We don’t buy ads,” Musk said in 2019.
It turns out that this strategy will come to an end. Musk announced this on May 16 at the annual shareholder meeting in Austin.
To an investor’s question, the billionaire answered, “We’ll try a little publicity and see how it goes.”
He explained that this reversal is due to the fact that it is necessary to educate consumers about Tesla features, Tesla products and the company’s technological innovations, which he claims are ahead in the field of artificial intelligence, compared to, for example, Google.
“It’s worth a try”
He added that advertising Tesla products will also allow the automaker to reach new audiences, as Tesla aspires to produce tens of millions of vehicles annually.
“It’s worth a try and we’ll see how effective it is,” Musk told CNBC in an interview broadcast on Twitter Spaces after the annual shareholder meeting. “I just agreed to it, so it’s not a complete strategy.”
The announcement pleased Tesla investors, who recently advocated a marketing strategy where competition closes the gap with Tesla.
Tesla investor Gary Black commented on Twitter: “elonmusk is committed to experimenting with ads, which is very bullish because TSLA will add a second variable besides affordability to accelerate adoption of electric vehicles.” “We have long considered that the biggest driver of TSLA’s dollar value is teaching the 90% of Americans who do not currently drive electric cars why electric cars are.”
“It seems Elon has realized that electric vehicle adoption isn’t just about affordability. We commented on how high the applause was today when Elon said ‘we’ll try the announcement and see how it goes.'”
Wedbush analyst Dan Ives believes that announcing its products was a “necessary” step for Tesla.
“At the shareholder meeting, Musk said that Tesla will now try to announce a big step forward and something that is needed in our opinion given the heightened competition/noise,” Ives clapped.
Musk did not say when Tesla’s first TV ad will air.