Elon Musk’s Tesla dives into advertising after years of resistance
Tesla has for most of its history been firmly averse to advertising. In recent months, however, the electricvehicle maker has hiked spending on a variety of paid media platforms—and not just the one owned by its boss, Elon Musk .
AvideoadcampaignonFacebook , Instagram and Musk’s own X, for example, is touting Tesla’s Model Y as “the #1 most American-made car,” citing a Cars.com ranking.
The ads mark a striking about-face for Musk, who as Tesla’s chief executive has long held advertising was unnecessary if Tesla’s product was good enough. “I hate advertising,” Musk tweeted in 2019.
Like other tech startups that became household names, such as Google and Apple , Tesla for years relied on word-of-mouth endorsements from early adopters and Silicon Valley techies, along with its CEO’s rising public profile, to raise awareness of its brand. Media coverage of Tesla is its primary sales driver, according to recent financial filings.
By last May’s annual Tesla shareholder meeting, however, Musk had changed his tune. When an attendee suggested the company should consider advertising to counter perceptions that it makes impractical sports cars for the wealthy, Musk responded, “We’ll try a little advertising and see how it goes.”
Tesla spent approximately $6.4 million on U.S. digital advertising in 2023, according to estimates from Vivvix, a division of ad-tracking company MediaRadar. While a dramatic increase over the approximately $175,000 that Vivvix estimates Tesla spent on ads in 2022, it was a pittance compared with investments by other carmakers. General Motors, for instance, spent $3.6 billion on global advertising and promotion in 2023, or about $580 for each of the 6.19 million vehicles it sold that year, according to its financial reports.
The majority of Tesla’s ad spending has gone to YouTube, according to Sensor Tower, a firm that monitors digital ads. But Tesla has recently also placed video ads on Facebook and Instagram, units of Meta Platforms, and on X. Tesla quietly experimented with buying ads on websites in recent years, but its online ad presence has grown significantly since that meeting, according to ad-tracking companies and some tech companies that have sold Tesla ads. Weeks after Musk’s comments, for example, Tesla began buying Google search ads to promote its vehicles and other products such as solar panels, according to Google’s Ads Transparency Center.
Musk’s companies including
Tesla deleted their official Facebookpagesyearsago,andhehas more recently publicly attacked Meta and taunted its chief executive, Mark Zuckerberg . Last year, the two billionaires sparred verbally on X and discussed duking it out in a cage match .
Earlier this month, however, a new page affiliated with Tesla beganbuyingtargetedvideoads across Meta’s platforms, according to data from Meta’s Ad Library.
Meta and YouTube parent Google declined to comment. Tesla and X didn’t respond to requests for comment.
Tesla’s new ad campaign on Facebook, Instagram and X promotes the Model Y with footage of a cowboy and the company’s Giga Texas factory in the Austin, Texas area. It also encourages viewers to buy before April 1, when Tesla has said prices will increase by $1,000.
Recent Tesla ads on YouTube include family-focused messaging, with images of children in back seats, mentions of the Model Y’s five-star safety rating and descriptions of a trip planner that can provide travel suggestions based on the locations of Tesla charging units.
“They’re trying to change the paradigm of Tesla being this cool sports car to a more familyfriendly car,” said Stasia Fulginiti, associate director for paid search and YouTube at digital-ad agency Rain the Growth
Agency. Tesla’s heavy reliance on YouTube ads instead of traditional TV may be a signal the company is looking for efficiency, since digital advertising allows it to target consumers who might be in the market for a Tesla, such as those who have searched for EVs, at a much cheaper per-user rate than with a traditional TV campaign, Fulginiti said.
Tesla has hired a marketing agency in the past, and the company spent eight-figure totals some years between 2016 and 2019 on marketing, advertising and promotional expenses as a category, according to its financial filings. Other filings, however, state that these totals primarily consist of promotional activities, and that related spending has in recent years been immaterial to Tesla’s business. Promotional efforts may include events unrelated to paid media, such as non-dealer showcases in shopping malls, said Tammy L. Madsen, associate professor of Strategy in the Management Department at the Leavey School of Business, Santa Clara University.
Experts disagree on whether Tesla’s recent ad buys signal a long-term investment. Slowing growth in consumer demand for electric-vehicles, along with increased competition among EV-makers, has drawn Tesla into advertising, said Craig Irwin, managing director and senior analyst at investment firm Roth MKM.
Tesla in January warned of “notably” slower growth in 2024, and its stock price has dropped by nearly 30% so far this year. China’s BYD last quarter overtook Tesla as the largest global seller of EVs . “They’re a very special car company, but they’re a car company. They need to advertise to maximize their visibility and go for every incremental sale they can garner,” Irwin said.
To secure its next wave of growth, Tesla must appeal to mass-market consumers, so it will need to invest significantly more in advertising, according to Madsen. But Tesla won’t need to spend as heavily on advertising as other carmakers, said Tom Narayan, lead global autos analyst at RBC Capital Markets. “They already have a really special brand,” Narayan said. “Elon is part of that brand. And they already have a big business without having to spend money on the brand.”