On May 16, Tesla CEO Elon Musk said in a meeting with shareholders that the electric car company will try advertising electric cars.
"We're going to try advertising to see how effective it is," Musk announced at the electric car company's annual meeting in Texas (USA). This will be a turning point for both Tesla and Musk. For many years, this billionaire has affirmed that Tesla does not need advertising, because demand always exceeds supply.
“Tesla doesn’t need to advertise or pay celebrities to praise its products. Instead, we use that money to create great products,” he said in a 2019 Twitter post.
So far, the world has been pretty optimistic about Musk and Tesla. But none of his commitments, from launching new products to staying on as CEO, have received as much positive feedback as yesterday’s ad decision. “I don’t think people wanted it that much,” he said.
Elon Musk at a meeting on May 16. Photo: Tesla
In a subsequent CNBC interview, Musk explained that he had not thought about advertising until he was asked about it in the meeting. One reason for Tesla’s strategy change is that competition from traditional automakers has become increasingly fierce. All of their competitors have announced increased advertising budgets for electric vehicles, even those that are not yet available for sale.
This, combined with rising interest rates, led Tesla to slash prices earlier this year, squeezing its profit margins, even though it still makes more money than traditional automakers.
The Twitter acquisition could also change Musk’s view of the value of advertising. The platform used to generate more than 90% of its revenue from advertising before Musk acquired it. Several companies have stopped advertising on Twitter in recent years, prompting Musk to seek a way to reverse the trend.
"It's funny how Twitter relies so heavily on advertising. I guess I should say: Ads are awesome and everyone should do them," Musk laughed.
Ha Thu (according to CNN)
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