Tesla's Dipping Stocks Trigger Elon Musk to Give in to Advertising, Spending Surges by $6.4 Million in 2023

John Lopez, Tech Times 31 March 2024, 10:03 am

Tesla is facing significant challenges as its stock value has plummeted nearly 30% this year. The EV producer has dropped more than $230 billion in value in less than three months. As of Thursday's closing, the stock price was $175.79.

Amid the mounting pressure, CEO Elon Musk has made a surprising move by finally spending on ads, a move he had vehemently opposed in the past. "I hate advertising," Musk said in 2019.

Elon Musk's Tesla Starts Spending on Ads

According to reports from The Wall Street Journal and ad-tracking platform MediaRadar's subsidiary Vivvix, Tesla's advertising spending soared to $6.4 million in 2023, a stark contrast to the mere $175,000 allocated in 2022. The company's newfound focus on marketing reflects a shift in strategy as it grapples with intensified competition.

Tesla's decision to venture into advertising comes as it faces stiff competition in the electric vehicle market. Rivals such as BMW have been enticing customers with incentives to switch to their electric offerings, putting pressure on Tesla's sales figures.

According to reports, the company's move towards advertising was reportedly prompted by a suggestion made at a shareholder meeting in May, signaling a departure from Musk's previous stance against traditional marketing methods.

GERMANY-US-AUTOMOBILE-TESLA

(Photo : ODD ANDERSEN/AFP via Getty Images)

Tesla CEO Elon Musk is pictured during a visit at the company's electric car plant in Gruenheide near Berlin, eastern Germany, on March 13, 2024, as employees resumed work after production had to be halted due to a suspected arson attack that caused a power outage.

Tesla's Ads Push

The bulk of Tesla's advertising budget was directed toward digital platforms, including YouTube, Facebook, Instagram, Google, and the Musk-owned X platform. Video ads posted now on the said platforms are promoting Tesla's Model Y as "the #1 most American-made car."

These campaigns primarily highlighted the features of Tesla vehicles, such as Autopilot functionality and spacious interiors, with a focus on promoting the Model Y.

More affordable than you think

World’s bestselling SUV is $1k off this month

Prices will go up again in Marchhttps://t.co/tEj0udh3Ll pic.twitter.com/aFPqU1CnyG
— Tesla (@Tesla) February 11, 2024

Insider notes that despite Tesla's reliance on word-of-mouth and referral programs, the company's recent struggles have necessitated a reevaluation of its marketing strategy. The significant decline in Tesla's stock value, coupled with increased competition from Chinese electric vehicle manufacturers, has further accelerated this shift.

"Tesla does not advertise or pay for endorsements. Instead, we use that money to make the product great," Musk said in 2019.

Analysts have revised their estimates for Tesla's first-quarter vehicle deliveries downward following reports of production cuts at the company's Chinese plant. Wedbush Securities, a prominent financial firm, lowered its estimate to 425,968 vehicles and reduced its price target for Tesla shares.

In a leaked internal email, Musk emphasized the importance of aggressive promotion to boost sales of Tesla's "full-self driving" subscription, priced at $12,000 per year. Tesla staff have been instructed to provide potential customers with a trial of the subscription during the car pickup process, underscoring the company's commitment to driving sales through innovative marketing tactics.

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