It is the end of an era at Tesla, and the beginning of a new chapter.
Until now, the automotive industry disruptor has stood out from its competitors by not advertising its cars. The Austin, Texas-based automaker relies on word of mouth from its fans and the personality of its whimsical and popular CEO Elon Musk to promote its products.
In 2022, Tesla delivered 1.31 million vehicles. The automotive group has achieved all this without any of its models appearing in a TV commercial. Tesla simply doesn't have a marketing and advertising department like its rivals General Motors or Ford. Basically, the group spends $0 on paid ads to sell its cars.
'We Don't Buy Advertising'
The marketing strategy of Musk and his company's has always been to focus on the buyers of his cars. Tesla focuses on a human-centric customer experience. Basically, the carmaker invests a lot in research and development (R&D) to develop products that are supposed to improve the experience of drivers.
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, where users praise its merits with each update.
"We don’t buy advertising," Musk said back in 2019.
It turns out that this strategy is going to end. This is what Musk announced on May 16 at the annual meeting of shareholders in Austin.
"We'll try a little advertising and see how it goes," the billionaire responded to an investor's question.
He explained that this reversal was due to the fact that it is necessary to educate consumers on Tesla features, Tesla products and the technological innovations of the company, which, he claims, are advanced on artificial intelligence, compared to Google, for example.
'It's Worth a Try'
He added that advertising Tesla products will also allow the carmaker to reach new audiences, as Tesla aspires to produce tens of millions of vehicles a year.
"It's worth a try and we'll see how effective it is," Musk told CNBC in an interview aired on Twitter Spaces after the annual shareholder meeting. "I only just agreed to it so it's not a fully formed strategy."
The announcement pleased Tesla investors, who have recently advocated a marketing strategy as competition closes the gap with Tesla.
"@elonmusk committed to try advertising, which is hugely bullish since TSLA will add a second variable beside affordability to accelerate EV adoption," Tesla investor Gary Black commented on Twitter. "We’ve long held the biggest $TSLA value driver is to educate the 90% of Americans who don’t currently drive EVs why an EV."
"Elon appears to have realized EV adoption is not just about affordability. We were stuck by how loud the applause was today when Elon said 'we’ll try advertising and see how it goes.'"
Wedbush analyst Dan Ives also believes that advertising its products was a "necessary" step for Tesla to take.
"At shareholder meeting Musk saying Tesla will now try some advertising a big step forward and something needed in our opinion given rising EV competition/noise," Ives applauded.
Musk didn't say when Tesla's first TV commercial will air.
