Tesla: Can a car company not advertise?

Most people know that the automotive sector is a cut-throat industry and that manufacturers will do whatever it takes to get consumers in the door. Automakers probably spend more on advertising than any other segment. So can a car company actually get away without spending a dime on promotional advertising and still drive the volume that it needs to survive? Well, there is one company that’s going to try and, no surprise, it’s Tesla.

The company just released its second quarter earnings. During a call, CEO Elon Musk told analysts that the company has spent virtually nothing on the promotion of its highly anticipated Model 3 and in his view they won’t spend a dime anytime soon. The enigmatic businessman stressed that they want to focus on the vehicles they can deliver to their customers and, in fact, if you visit a showroom the sales teams won’t spend much time talking about the Model 3. It will take several years for new models to reach new buyers that walk on to the showroom floor.

Obviously, having half a million people put down a deposit of a $1,000.00 for a car that most people won’t see for another two years has shaken the established brands to their core. The challenge for them is how they can capture the same lightning in a bottle? In comparison, the Nissan Motor Company spent over $4 million dollars marketing its electric vehicle – the Leaf – in 2016 and it generated sales of just over 6,000 of the cars in that period. This amounts to over $700 in advertising per vehicle sold, but this figure does not include what the regional dealer associations or individual dealers spent on promoting the car so that $700 figure might look more like a grand by the time the car is finally sold.

The truth is that Tesla did do a bit of advertising this year in the form of user-generated content. They held a contest that called for people to submit a video of their car and the winner would could attend a future launch event. Elon Musk then tweeted the winner out to his 11 million followers – yes 11 million followers, think about the value of knowing that 11 million people will hear and engage with your message. The other thing that’s helped Musk is the incredible reception the car has gotten from automotive journalists who seem to go crazy when offered a chance to gush about the future of Tesla. 80% of the journalists that took part in a test drive event said they would buy the car for themselves.

There’s an old adage in the advertising world – nothing kills a good product quickly like bad advertising and nothing kills a bad product faster than good advertising. We think Elon Musk has a new spin on this – give the people a product that they want and let them advertise it for you.