Unlike Big Auto, Tesla spends $0 on traditional advertising

Posted on August 13, 2017 by Matt Pressman

Have you ever wondered why you haven't seen a glitzy TV commercial for Tesla's new Model 3? According to Advertising Age*, "Tesla still doesn't need [any] paid advertising to make sales." E.J. Schultz reports that, "even as the Model 3 goes on sale for anticipated delivery starting in the fourth quarter, word-of-mouth and free media coverage seems to be enough to fuel demand for the foreseeable future."

Above: All three Tesla vehicles (Instagram: theelectriccar)

On the other hand, "General Motors spent $3.7 million in measured media on the Chevrolet Bolt electric vehicle for the first three months of 2017... [and] Nissan in 2016 spent $4.3 million in measured media on its electric Nissan Leaf, including on print ads early last year that took on Tesla. By contrast, Tesla spent nothing, according to Kantar."

Above: Comparing automakers, Tesla is the only automaker that shows $0 of ad spending (Source Advertising Age* via Kantar Media)

Citing the reservations for the Model 3, Michelle Krebs, a senior analyst for AutoTrader, explained: "I don't expect that Tesla will have to spend a dime on advertising anytime soon. It will take Tesla a good amount of time to fulfill those orders even if they are successful with their ambitious launch plan. Tesla, indeed, has built a strong brand that requires little or no promotion for now. Tesla has taken on a life of its own."

Above: Tesla factory in Fremont, California (Instagram: sammacmebabe)

Furthermore, Tesla noted in their December 2016 10-K regulatory filing: "Media coverage and word of mouth have been the primary drivers of our sales leads and have helped us achieve sales without traditional advertising and at relatively low marketing costs."

Above: Between the Model S and X alone, Tesla has already gobbled up nearly half of all U.S. electric vehicle sales (Source: CNBC* via Moody's)

Elon Musk explained on the most recent Tesla earnings call, "We're not promoting the [Model 3] car. If you go to our stores, we don't even want to talk about it, really, because we want to talk about the thing that we can supply. If somebody orders a Model 3 now, it's probably late next-year before they get it."

Above: Blue Tesla Model 3 (Instagram: masanori_nakayama)

Musk continued, "With a small amount of effort we can easily drive the Model 3 reservation number to something much higher but there's no point. It's like if you're a restaurant and you're serving hamburgers and there's like an hour and a half wait for hamburgers do you really want to encourage more people to order more hamburgers?"

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*Source: Advertising Age, CNBC

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