Elon Musk changes strategy at company annual meeting
Steady price cuts for Tesla cars this year have squeezed profit margins for the company, even though it remains more profitable than traditional automakers.
Tesla is planning a change in its marketing strategy, as Elon Musk announced that the company will start advertising for the first time in its history. “We're going to try some advertising and see how it goes,” Musk said in response to a shareholder question at the company's annual meeting in Austin, Texas.
The public response has been very positive. “I didn't realize people wanted it so much,” Musk later said. Either way, the decision is a setback for Tesla and Musk. The billionaire CEO has insisted for years that Tesla doesn't need to advertise, as demand for its vehicles already exceeds supply.
“Tesla does not advertise or pay for endorsements (i.e. to drive the cars of celebrities). Instead, we're using that money to make the product great,” he tweeted in 2019.
As Musk revealed in an interview with CNBC after the AGM, he hadn't decided to advertise until he got that question yesterday. One thing that has changed for Tesla is greater competition from other automakers, which have devoted a significant portion of their advertising budget to electric vehicles, even advertising vehicles that are not available for sale, CNN explains.
Intensifying competition, combined with rising interest rates, has led Tesla to make a series of price cuts for its cars this year. Those price cuts have squeezed margins for the company, although it remains more profitable than traditional automakers.
Twitter's acquisition may also have played a role in causing Musk to change his mind about value. of advertising. Before the acquisition by the billionaire entrepreneur, the social media platform earned more than 90% of its revenue from advertising. Of course, since the acquisition, Twitter has seen advertisers leave the platform.
