Elon Musk Agrees To "Try a Little Advertising" at Tesla, Is This About Demand?

Traditional carmakers spend billions on advertising every year. Despite that, their sales have decreased in the past years, and customers are far from excited about their vehicles. On the other hand, Tesla always relied on its fans to spread the word instead of paying for advertising. This strategy worked perfectly for the company, as no other carmaker enjoys the same unconditional support from its customers. A Tesla car could fall apart in the middle of the highway, and the company's fans should still try to convince you that it's not true or it's the driver's fault.

Still, this strategy would not work forever. It moved Tesla from a niche car manufacturer to an established carmaker but can't scale to the mass-market proportions Elon Musk projects for the company. Tesla fans are entrenched in their own bubble, and getting to the 20 million cars in annual production requires Tesla to convince people outside that bubble. Moreover, Tesla sales have peaked over slower-than-expected demand. A Tesla investor made These arguments during the 2023 Annual Shareholder Meeting, with a surprising result.

In an unprecedented move, Elon Musk conceded that advertising on Twitter is like preaching to the choir. All people who follow Tesla and Musk on social media are already convinced, but their appetite for buying more Teslas is finite. Musk appeared to have changed his mind while talking to the investor, which was even more interesting. "I believe in taking suggestions, so we'll try a little advertising and see how it goes," Musk said.

If you watch the video below, you'll see that Musk's words have caused a frenzy in the crowd attending the meeting. Investors have asked Tesla for months to consider advertising instead of price cuts to accelerate sales. Still, the response from the investors attending the Cyber Roundup surprised Musk. He didn't offer any details about the advertisement plans, which is understandable considering he didn't analyze the option before. We don't know when Tesla will start advertising or how much money it will spend.

In an interview with CNBC's David Faber after the shareholder meeting, Elon Musk said that Tesla would do informative and entertaining advertisements. He disagrees with other companies who pace misleading ads, and Musk gave Twitter as an example. He says advertisers left the platform because they were "community noted" after stating inaccurate facts about their products. When asked about the kind of ads that Tesla would make, Musk said that ideally, they should be aesthetically pleasing and have some artistic elements so people don't regret watching.