Former Tesla Inc (NASDAQ:TSLA) executive Martin Viecha said on Thursday that he has always been for advertising the company’s products, contrasting with the opinions of company CEO Elon Musk.
What Happened: Viecha, who left the company earlier this month, thinks that small investments in advertising could enhance the company’s margins while also accelerating the world’s transition to EVs.
“FWIW, personally, I’ve always been pro-advertising. ~1% of revenue spent on ads (both digital and TV) would, I think, be margin accretive and mission accretive,” Viecha, also a Tesla shareholder, wrote. He was responding to a post by Tesla enthusiast Ryan Cowan on the best-selling car worldwide in 2023.
The best-selling car around the globe last year was Tesla’s Model Y SUV of which the company sold over 1.2 million units. The Model Y was seconded by a car from the world’s top car seller Toyota.
However, very few of those Cowan talked to guessed it to be the Model Y. Many were convinced that the best-selling car in 2023 was either a Toyota, a Mazda, or even a car from a Chinese brand. While some of the older respondents displayed a lack of confidence in driving an EV, the younger respondents showed more interest, particularly if the price of EVs were to come down further.
“Still today, even in the US, when I tell people that Model Y is the best selling car in the world, I get a “there’s no way that can be true” look. Every time,” Viecha noted.
Musk, too, responded to Cowan’s video earlier this week with a brief, “Interesting.”
Trial And Error: Musk first expressed willingness to try traditional advertising less than a year ago in May 2023. Until then, the company boasted of spending almostno money on advertising but gaining popularity purely via word of mouth.
Since then, Tesla has attempted advertising on YouTube, X, and even Meta Platforms' Instagram, and Facebook.
However, in January, Tesla executives clarified during the fourth-quarter earnings call that while the lack of awareness impacted EV adoption, the company would not spend too much on advertising and marketing but instead spend it in areas and geographies where the company has low market share such as Japan.
Tesla, in April, also laid off its marketing team in the U.S. with the CEO saying that the ads they made were “too generic.”
Analyst Take: The Future Fund Managing Partner Gary Black has often criticized Tesla's attempts at driving sales via price cuts that weigh heavily on the company's margins. Black recommends advertising instead.
“As a Tesla shareholder please convince your ex-boss,” Black wrote to Viecha on Thursday.
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