Tesla's Spending on R&D and Marketing, Compared to Other Automakers(visualcapitalist.com)
visualcapitalist.com
Tesla's Spending on R&D and Marketing, Compared to Other Automakers
https://www.visualcapitalist.com/comparing-teslas-spending-on-rd-and-marketing-per-car-to-other-automakers/
19 comments
Tesla generally does not spend on external advertisement but they do spend money on marketing and the two shouldn't be conflated (the former being only part of the latter). In fact the article itself points out that "Tesla is a marketing machine". From their own social media presence, to blogs, to presence on influencer channels, to brand-referral programs, even Musk's role itself when facing the public is part of their marketing and Tesla certainly spends money and hires people for it. What they do not do is go through traditional, external, ad channels, they essentially manage their brand presence themselves, but they certainly do have one.
They have social media presence, not a lot, they do more in China by far then Europe or the US. Their bloging is not very active. People working at Tesla almost never show up and do media.
Its basically impossible to get anybody but Elon for anything. And getting Elon is not very easy.
The amount of times I have heard long form interviews with anybody from Tesla is vanishingly small. The 'infuencer' mostly do this stuff by themselves. In fact, many of the even pro Tesla people are kind not very happy about not having even a basic PR team.
Car journalist usually get premium service and get the best spec version of each car delivered to their house. With Tesla, they literally can't even call anybody. If you review a Tesla you have to figure out yourself how to get it.
Car journalist regularly get flown across the country, given special tours access to engineers and much more. Tesla ignores them almost completely. A lot of journalist still send to Tesla for comment and most have not heard back in years.
Musk is just Musk, I mean, he would be doing what is doing anyway, and not really some calculated marketing. I mean he is more active in terms of talking about SpaceX. And SpaceX doesn't need social media marketing. And there is no team at Tesla, managing his twitter.
They have axed the referral program as well, for anything other then solar roofs.
The most expensive marketing they do is the occasional presentations like 'Autonomy Day', 'Battery Day' and 'AI Day' but you are lucky to get one ever year.
I think its fair to say that the overall money spent by Tesla on Marketing and PR is almost vanishingly small. There are single product marketing campaigns for individual cars that are more elaborate by far. Basically one guy making jokes on twitter and a few social media manager.
Hyundai is running adds with the whole lineup of marvel character and some actors from the films. And those licenses and actors don't come cheap. And airing them during prime time football is expensive. So the ads for that car in the US alone is probably way more then Tesla spends overall.
Its basically impossible to get anybody but Elon for anything. And getting Elon is not very easy.
The amount of times I have heard long form interviews with anybody from Tesla is vanishingly small. The 'infuencer' mostly do this stuff by themselves. In fact, many of the even pro Tesla people are kind not very happy about not having even a basic PR team.
Car journalist usually get premium service and get the best spec version of each car delivered to their house. With Tesla, they literally can't even call anybody. If you review a Tesla you have to figure out yourself how to get it.
Car journalist regularly get flown across the country, given special tours access to engineers and much more. Tesla ignores them almost completely. A lot of journalist still send to Tesla for comment and most have not heard back in years.
Musk is just Musk, I mean, he would be doing what is doing anyway, and not really some calculated marketing. I mean he is more active in terms of talking about SpaceX. And SpaceX doesn't need social media marketing. And there is no team at Tesla, managing his twitter.
They have axed the referral program as well, for anything other then solar roofs.
The most expensive marketing they do is the occasional presentations like 'Autonomy Day', 'Battery Day' and 'AI Day' but you are lucky to get one ever year.
I think its fair to say that the overall money spent by Tesla on Marketing and PR is almost vanishingly small. There are single product marketing campaigns for individual cars that are more elaborate by far. Basically one guy making jokes on twitter and a few social media manager.
Hyundai is running adds with the whole lineup of marvel character and some actors from the films. And those licenses and actors don't come cheap. And airing them during prime time football is expensive. So the ads for that car in the US alone is probably way more then Tesla spends overall.
I wouldn't disagree with you that certainly the large carmakers spend more on marketing without a doubt, but then again Volkswagen also sells about as many cars in two weeks as Tesla does in a year.
The size difference aside I also think it's sometimes hard to tell though what at Tesla is marketing and what is research. The Cybertruck to me almost was about as much marketing for Tesla overall as it is an actual product. And when it comes to SpaceX and Tesla, I wouldn't exactly say that shooting a roadster into space qualifies as automotive research.
The size difference aside I also think it's sometimes hard to tell though what at Tesla is marketing and what is research. The Cybertruck to me almost was about as much marketing for Tesla overall as it is an actual product. And when it comes to SpaceX and Tesla, I wouldn't exactly say that shooting a roadster into space qualifies as automotive research.
> many cars in two weeks as Tesla does in a year.
You should update your views then. Tesla is getting close to 1 million cars per year this year. VW is about 10 million per year.
But comparing to VW is one thing, comparing it to BMW or Geely is another. If you compare it to BMW for example Tesla is around 40% and by next year likely above 50%.
The 'Tesla is tiny and therefore not representative' argument is starting to get a bit tricky.
> as much marketing for Tesla overall as it is an actual product
That quite the claim. Tesla is literally spending a billion+ on a gigantic factory for it that is already being built. Its the most pre-order product in automotive history.
Its their attempt at going after the biggest and most profitable part of US automotive market. There are 2 million pickups sold in the US alone. The earning and profit potential from just this market alone is gigantic.
I know that 'Cyberturck fake product' is the newest twitter anti-Tesla bandwagon but those claims have no credibility.
Product announcement do count as marketing however, I would agree. In general, those kind of events are just not very common. Events like this happen really only 1-2 a year max.
GM for example has been doing a huge amount of marketing for the Lyric Crossover coming in 2023. However, nobody seems to car about another GM CUV type vehicle so it doesn't 'feel' like they are doing as much, but they are clearly doing much more.
You should update your views then. Tesla is getting close to 1 million cars per year this year. VW is about 10 million per year.
But comparing to VW is one thing, comparing it to BMW or Geely is another. If you compare it to BMW for example Tesla is around 40% and by next year likely above 50%.
The 'Tesla is tiny and therefore not representative' argument is starting to get a bit tricky.
> as much marketing for Tesla overall as it is an actual product
That quite the claim. Tesla is literally spending a billion+ on a gigantic factory for it that is already being built. Its the most pre-order product in automotive history.
Its their attempt at going after the biggest and most profitable part of US automotive market. There are 2 million pickups sold in the US alone. The earning and profit potential from just this market alone is gigantic.
I know that 'Cyberturck fake product' is the newest twitter anti-Tesla bandwagon but those claims have no credibility.
Product announcement do count as marketing however, I would agree. In general, those kind of events are just not very common. Events like this happen really only 1-2 a year max.
GM for example has been doing a huge amount of marketing for the Lyric Crossover coming in 2023. However, nobody seems to car about another GM CUV type vehicle so it doesn't 'feel' like they are doing as much, but they are clearly doing much more.
Am I the only one who thinks that this marketing strategy is brilliant? I mean, it really is the most discussed car right now, and people are the ones who promote this car, so the company doesn't even need to do anything. I'm pretty sure that it's just an exception because I doubt that any product can repeat this, so usual entrepreneurs still have o spend a fortune on promoting their products. Some of them use outsourcing services like Awesomic, and I think it's a better decision for small companies.
"per car sold"
Spending a massive amount on R&D per car sold is actually not a good outcome. It's unlikely the ratio will stay the same as Tesla sells more vehicles.
Spending a massive amount on R&D per car sold is actually not a good outcome. It's unlikely the ratio will stay the same as Tesla sells more vehicles.
And what if it does?
Which type of spending leads to a better product?
Which type of spending leads to a better product?
Mu. They won't sustain it, it's not an interesting discussion.
To be fair, Toyota and GM make a hell of a lot more cars, so their total amount of R&D is probably pretty good. It likely dwarfs Tesla's budget.
Which honestly makes what Tesla is doing with the budget they do have all the more astonishing.
I'd be interested to see a breakdown for software budget. Say what you will about FSD, Tesla produces far better software than GM, Ford, VW, or Toyota.
Which honestly makes what Tesla is doing with the budget they do have all the more astonishing.
I'd be interested to see a breakdown for software budget. Say what you will about FSD, Tesla produces far better software than GM, Ford, VW, or Toyota.
I didn’t find Tesla’s software particularly good. The overall UX in a new BMW IMHO is quite a bit better.
At the same time, it isn’t completely the software team’s fault that their UX is bad. Big touchscreen with no extra controls is naïve design.
At the same time, it isn’t completely the software team’s fault that their UX is bad. Big touchscreen with no extra controls is naïve design.
The numbers are even more extreme. Individual dealerships add a lot of additional local advertisement. They sponsor football teams, run local ads and so on. When new products are launched they spend money tell this to their local costumers. I assume that adds up quite a bit and is not reflected in these numbers.
The R&D part is interesting. I always thought Tesla R&D spending was quite low, for what they were actually doing. I think this is because Musk really knows what he actually wants and works on solving those problems specifically.
R&D for quite a while didn't grow much at Tesla and then resonantly it went up quite a bit again. We will see how this will continue to scale as they increase production.
Logically as they get more cars the R&D per car should be dropping quickly as its averaged over more cars. But Tesla is not gone give any dividend, so they eventually will have to spend that money somewhere.
Working on things like robots certainty seems like something you would only do if you had enough free cashflow. Only 3 years ago people would have gone ballistic over Tesla 'wasting' money on trying to build a humanoid robot, calling it irresponsible. But other then people saying its bad idea and will fail, nobody seem to question if they had the funds to do it.
Research on batteries will certainty continue to be a huge part of what they do. They have seriously put themselves into 'competition' with LG, CATL, SK, Panasonic in terms of battery research and bringing that research into products. To do that fully vertically integrated, including the manufacturing part, not just the chemistry is a herculean effort.
Elon has been wanting to develop electric super sonic planes for more then a decade, and eventually they will certainty start R&D for that sort of thing, and that a great way to a couple 100M.
Overall I expect Tesla R&D to continue to be higher per car even as they start to match some of the other big car makers in terms of pure volume. Not as big a difference as there is now, but vertical integration will force them to do that.
The R&D part is interesting. I always thought Tesla R&D spending was quite low, for what they were actually doing. I think this is because Musk really knows what he actually wants and works on solving those problems specifically.
R&D for quite a while didn't grow much at Tesla and then resonantly it went up quite a bit again. We will see how this will continue to scale as they increase production.
Logically as they get more cars the R&D per car should be dropping quickly as its averaged over more cars. But Tesla is not gone give any dividend, so they eventually will have to spend that money somewhere.
Working on things like robots certainty seems like something you would only do if you had enough free cashflow. Only 3 years ago people would have gone ballistic over Tesla 'wasting' money on trying to build a humanoid robot, calling it irresponsible. But other then people saying its bad idea and will fail, nobody seem to question if they had the funds to do it.
Research on batteries will certainty continue to be a huge part of what they do. They have seriously put themselves into 'competition' with LG, CATL, SK, Panasonic in terms of battery research and bringing that research into products. To do that fully vertically integrated, including the manufacturing part, not just the chemistry is a herculean effort.
Elon has been wanting to develop electric super sonic planes for more then a decade, and eventually they will certainty start R&D for that sort of thing, and that a great way to a couple 100M.
Overall I expect Tesla R&D to continue to be higher per car even as they start to match some of the other big car makers in terms of pure volume. Not as big a difference as there is now, but vertical integration will force them to do that.
Was launching a car into space not marketing?
How much did Tesla pay for it? Answer: nothing.
It was launched in place of a concrete "mass simulator" at no cost to Tesla.
When there are hundreds of great EV options in the market, Tesla will need to advertise. They enjoy a brand advantage now, but that will fade in the next 2-3 years.