In a recent interview with Tesla investors and supporters, the Tesla CEO said that "advertising is being considered to combat user bias". To date, Tesla has never had an advertising budget.
Tesla does not produce TV commercials or place social media ads like other automakers. Instead, the money is reinvested and used to grow the company. More importantly, Tesla is so popular that supply can't keep up with demand, so it doesn't feel the need to advertise. But why would Elon Musk suddenly change his attitude and consider advertising?
For years, Elon Musk has said he "despises spending money on advertising. In addition, Musk ended Tesla's public relations department two years ago. However, as the company grows rapidly and becomes the No. 1 car company by stock market value, Tesla officials and investors are proposing to produce and expose ads in order to solidify the auto industry's No. 1 position.
In response, Musk acknowledged in a recent interview that there are several advantages to advertising, saying "Tesla may launch ads to fight bias." "The media reports negative news about the car, so Tesla has to advertise. Basically, advertising is the cost of promoting a brand in media channels, and the automaker is one of the biggest advertisers."
Musk added, "If the media posted negative news about GM next to a GM ad, someone from GM would call the media. And Tesla doesn't pay the media to place ads and is at a disadvantage because it doesn't have a PR department to handle negative press."
According to the U.S. Census Bureau, the U.S. auto industry will spend more than $12 billion on digital advertising in 2020 alone. In addition, Tesla, which produces on a much smaller scale than the existing large automakers, spends "$0" on advertising but invests much more in R&D than the existing large automakers, according to a report for the fourth quarter of 2021.
So far, Tesla has been doing very well without advertising. Interestingly, Tesla has also benefited from other automakers' electric car ads. This has sparked interest in Tesla when other brands flirt with Tesla in their ads.
In fact, Tesla did not advertise on TV during the Super Bowl. For reference, a 30-second commercial during the Bengals-Rams game was worth $6.5 million. Tesla did not advertise at the Super Bowl, but it said it also saw an increase in orders due to competitors' electric car ads.
Musk said Tesla could launch media ads to avoid bias, but Tesla's strong demand far exceeds its capacity. That's not a priority right now. "If we produce ads, we will focus on providing information that will help our customers and potential buyers understand Tesla's products," Tesla said.