Tesla CEO Elon Musk made it very clear in the past he doesn’t think there is a need for the company to advertise.
But in a complete turnaround for Tesla and Musk, the billionaire CEO has told company shareholders they will advertise for the first time in its history.
Why the change of heart?
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In the past, Musk suggested there wasn’t a need for the automaker to advertise because he claimed demand for vehicles outstrips supply.
“Tesla does not advertise or pay for endorsements. Instead, we use that money to make the product great,” he said in a 2019 tweet.
Tesla is facing greater competition from existing automakers, though, many of which have devoted much of their advertising budget to electric vehicles, even the ones not yet on sale.
Add to that increasing interest rates, and Tesla has been backed into a corner whereby it’s been forced into a series of price cuts this year.
Despite those price cuts and the subsequent squeezed margins for Tesla, it still remains more profitable than traditional automakers.
Addressing company shareholders, Musk said, “We’ll try a little advertising, and see how it goes.”
Musk openly admitted, though, advertising was not something he has decided to do until he was asked about it at the meeting.
His decision to change course appears to be the right one, as it was met with a positive reaction from the audience.
“I didn’t realize people wanted it that much,” he said.
Some will say Musk’s Twitter purchase changed his mind on the value of advertising.
After all, the platform previously earned more than 90% of its revenue from advertising before he purchased it.
That being said, Twitter has since seen advertisers flee the platform.
In a bid to bring them back, Musk said, “I guess I should say, ‘Advertising is awesome an everyone should do it.’”
