With the electric car competition growing and Tesla’s sales slumping, Elon Musk may have to reevaluate his decision to avoid advertising for Tesla’s environment-efficient vehicles.
Tesla, Inc. (NASDAQ: TSLA) erupted into the auto industry without the help of the advertisement industry. The Automotive Company thrived off of the exorbitant demand for its innovative cars–an exorbitant demand that exceeded the volume of cars it could supply. Consumers waited for months and even years for their cars to be available after they had ordered.
Elon Musk said in a 2017 interview, “We’re not promoting the [Model 3]…we don’t even talk about it, really…If somebody orders a Model 3 now, it’s probably late next-year before they get it.”
Even with Musk admitting to the long wait for the cars, customers were not stricken and still patiently waiting for their vehicles. Now, the demand for Tesla automobiles is not in excess. Model 3 can be delivered in two weeks, so essentially, the long queue does not exist.
Competition and tax credit deductions led the Company to a 31% sales decline in the first quarter of the year. This has been the biggest quarterly decrease in sales in Tesla’s 15-year history.
While still facing the competition from producers of gas vehicles, there is heightened competition for electric cars as consumers are gaining more exposure to the practicalities of electric cars. Tesla’s electric vehicle competitors have already spent large funds on advertising and are willing to spend more on advertising.
“They’ve been able to survive up to this point on word of mouth. If you were able to have six-month wait lists, why would anyone want to spend money on marketing? But the pipeline for demand is a lot shorter now,” said Kelsey Mays, senior consumer affairs editor at Cars.com.
In 2018, the auto industry spent approximately USD 9.3 Billion on advertising, according to Kantar Media. The more you spend on advertising is associated with more sentience for the vehicles, said Ed Williams of Kantar Media.
In contrast, Tesla’s only advertising has been its “Project Loveday” contest, which offered customers to develop their best ideas for advertising. These ads were considered rather competent and advantageous, but Tesla only put these on its website.