Tesla Model 3, Courtesy of Tesla Inc.
Nicolas Caballero's picture

Tesla Spends Three Times R&D Average On Each Car Sold, With No Advertising At All

A recent study by stockapps.com concluded that Tesla is basically a genius company in terms of advertising and creativity, and that spending is 100% allocated to critical areas such as R&D, which directly benefits customers, instead of marketing/advertising, like legacy OEM manufacturers.
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If you look in a newspaper or magazine, on mainstream TV or on the radio, you will discover a huge number of advertisements for car manufacturers, but you will not find a single advertisement for any Tesla model. The California (now Texas) brand does not invest in direct advertising: in fact, it is the brand that invests the least in this kind of commercial approach; and on the contrary, it is the car manufacturer that invests the most in R&D per car sold, by far.

Tesla Model X, courtesy of Tesla Inc.

When we buy a car we are not only paying for the mechanics or the technology behind it, we are also paying for the development, personnel, research, infrastructure, and the thousands of steps and systems necessary for a car to materialize. Throughout its business life, Tesla has not spent a single dollar on advertising, at least not directly; but as confirmed by a study by Stockapps.com, it is the company that spends the most on R&D for each car it sells.

For every car sold a manufacturer invests about $1,000, on average, in the delicate and critical research and development process. Meanwhile, Tesla spends $2,984 per car on R&D, which actually is almost triple the average. As the study shows, other companies such as Ford, Toyota, General Motors or Chrysler do not even come close to that figure, since part of their income is used for expensive mass media marketing campaigns.

Tesla Model 3, Courtesy of Tesla Inc.

Tesla's strategy is worthy of case studies, as it is basically a unique case in the history of the automobile. Few are the legacy OEM brands that don't invest a single dollar in advertising, very especially luxury brands such as Rolls-Royce, Bugatti or Ferrari; although the latter two actually do spend on secondary products such as watches, to give just an example. According to the study, Tesla spends a total of 0 (zero) dollars per car, while the North American average stands at almost 485 dollars. Chrysler is a peculiar case, as it spends almost the same amount on advertising as on R&D.

Tesla Model Y, Courtesy of Tesla Inc.

The creative approach of its advertising, as related to Tesla, is mainly aimed at the emergence of constant news and updates, in addition to an intense campaign on Social Media, either through the users themselves or through Elon Musk, who feels like a fish in water in those platforms (mainly twitter). Those huge savings, needless to say, allow Tesla to greatly improve its technologies and new developments. The strategy has already proven fruitful and efficient, as you can tell by the excellent market positioning of its Model Y, Model 3, Model S and Model X, undisputed leaders in terms of sales and technology.

You can review the full stockapps.com study on this link.

All images courtesy of Tesla Inc.

Nico Caballero is the VP of Finance of Cogency Power, specializing in solar energy. He also holds a Diploma in Electric Cars from Delft University of Technology in the Netherlands, and enjoys doing research about Tesla and EV batteries. He can be reached at @NicoTorqueNews on Twitter. Nico covers Tesla and electric vehicle latest happenings at Torque News.


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