Tesla Motor’s commitment to a $0 advertising budget is no secret to consumers or investors. The burgeoning car company has no advertising team, no CMO, and no ad agency. Even so, Tesla is one of the most trendy and sought-after car brands in the automotive industry and it’s building name recognition that rivals its legacy competitors — without the help of advertising.
Let’s take a closer look at Tesla’s advertising and marketing strategy (or lack thereof) to better understanding brand recognition in the auto industry.
Though Tesla is a household name and a global brand, its production capacity is still limited. Tesla produced just 84,000 vehicles in 2016 — paltry in comparison to Volkswagen’s 10.5 million vehicles and Ford’s more than 6.5 million.
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Tesla’s low production numbers are likely the result of introducing a completely novel product with a high price tag. That said, as Tesla completes its new factories and rolls out its newest and most affordable car, the Model 3, total annual vehicle production numbers are expected to increase.
The differences between Tesla and the other automotive companies are even starker when comparing advertising strategies. Since it was founded, Tesla has spent $0 on traditional advertising.
Its competitors, on the other hand, are spending billions on TV ads, billboards, digital banners, and more. American brands Ford and GM are spending approximately $4.3 billion and $5 billion respectively, and German luxury brand BMW spent over $3 billion.
The sense that Tesla’s an extraordinary presence in the auto industry doesn’t stop with its ad budget, though. It’s also putting up some stellar (and baffling) numbers in market capitalization. By the end of the first quarter in 2017, Tesla’s market value reached $51.6 billion, towering over American competitor Ford at $44.9 billion despite losses and limited production.
Looking at a two year period between Q1 of 2015 and Q1 of 2017, all car brands except for Tesla saw a negative change in market capitalization. Where Ford’s market capitalization saw a decline of over 20%, Tesla’s market capitalization grew by approximately 45%.
Despite low production numbers, lackluster revenue, and consistent losses, Tesla is still a hit among investors. So where is investor confidence coming from?
While some of it might be Tesla’s unique position and product within the automotive industry, some of it might also be attributed to the organic conversations and excitement surrounding Tesla’s brand. Tesla isn’t just another car company, but a brand that represents innovation and a total sense of newness in an industry that’s begging for disruption.
Customers and car enthusiasts are buzzing about Tesla products, which means that Tesla has little to do when it comes to raising brand awareness. Whether or not Tesla can keep its ad spend at $0 remains to be seen, but for now, consumers are keeping Tesla in the conversation and ensuring that it’s never far from minds or headlines.