Tesla Advertising Still Nil, Model 3 Not Pitched At Stores

1 month ago by Steven Loveday 43

Tesla Model 3

Tesla Model 3

Tesla isn’t promoting the Model 3 and doesn’t plan to ever push it, since the automaker is already up against what appears to be a monumental struggle to fill some 455,000 reservations.

Tesla doesn’t advertise in the first place, though the company surely wants people to buy its cars (just not the Model 3). Most of the automaker’s sales stem from word of mouth, and social media hype. However, the company is taking it even further in the opposite direction with the Model 3, and essentially “unselling” the car.

Musk explained at last Wednesday’s Q2 earnings call (via Automotive News):

“We’re not promoting the car. If you go to our stores, we don’t even want to talk about it, really, because we want to talk about the thing that we can supply. If somebody orders a Model 3 now, it’s probably late next-year before they get it.”

Tesla Model 3

Inside the Tesla Model 3

Tesla has to fill all existing orders in a reasonably timely fashion, and meanwhile an average of 1,800 more reservations were recently streaming in everyday. Musk feels that the automaker can fill the orders by sometime late next year, but that is an incredibly lofty goal. Model 3’s would have to come off the assembly lines mere minutes apart for the company to build 500,000 in a year. It’s not even possible to paint the cars that fast, let alone the entire assembly process.

At this point, Tesla is not even in a position to make the 1,800 additional daily reservations over the course of an entire month or more. So, with today’s Model 3 production speed, each day of reservations could potentially add a month or more to the total timeline, until the S-Curve begins to head up and production is moving briskly. Though Musk is extremely positive, and is forecasting ambitiously, it seems he’s well aware of how dire the situation could become. Musk shared:

“With a small amount of effort we can easily drive the Model 3 reservation number to something much higher but there’s no point. It’s like if you’re a restaurant and you’re serving hamburgers and there’s like an hour and a half wait for hamburgers do you really want to encourage more people to order more hamburgers?”

Companies like Nissan have found sales success through advertising. The Nissan LEAF is currently up 24.4 percent year-over-year, due in part to some $4.3 million spent on advertising. Chevrolet spent $3.7 million marketing the Bolt EV for the first three months of 2017. Though the Bolt was only on sale in California and Oregon initially, and is still not available nationwide, Chevrolet has sold 9,563 copies through July. Senior analyst for AutoTrader, Michelle Krebs, believes that Tesla has built a strong brand and doesn’t need to advertise. She said:

“I don’t expect that Tesla will have to spend a dime on advertising anytime soon. It will take Tesla a good amount of time to fulfill those orders even if they are successful with their ambitious launch plan. Tesla, indeed, has built a strong brand that requires little or no promotion for now. Tesla has taken on a life of its own.”

Since the Tesla Model 3 handover event, and another recent test-drive event for automotive journalists, the Model 3 is receiving rave reviews. MotorTrend wrote (via Automotive News):

“if anybody was expecting a typical boring electric sedan here, nope. The ride is Alfa Giulia (maybe even Quadrifoglio)–firm, and quickly, I’m carving Stunt Road like a Sochi Olympics giant slalomer, micro metering my swipes at the apexes.” The Model 3 “is so unexpected scalpel-like, I’m sputtering for adjectives.”

Musk said at the Q2 earnings call that 80 percent of the journalists said they would personally buy a Model 3. He continued:

“This is crazy. I’ve never seen anything like it.”

So, whether or not Tesla wants to add more reservations, whether or not the automaker chooses to try not to sell the car, or assure not to advertise or talk about the Model 3, others will keep talking. At this point, the Model 3 seems to be advertising itself. We shall see how much all of this changes as Tesla attempts to meet the colossal demand.

Source: Automotive News

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43 responses to "Tesla Advertising Still Nil, Model 3 Not Pitched At Stores"

  1. R.S says:

    “Tesla has to fill all existing orders in a reasonably timely fashion, and meanwhile an average of 1,800 more reservations were recently streaming in everyday.”

    They still do, huh? I thought that was the average of reservations per day in the week after the first ones got delivered.

    I’m not so sure if there still is this constant stream of new reservations.

    1. Nix says:

      Well, the Automotive News story that this is based on was written August 3rd, for August 4th publication. (see the link at the end of the story). So I wouldn’t expect it to include any information since that time, 6 days after the reveal. Here is the byline:

      August 4, 2017 @ 7:16 am
      E.J. Schultz

      1. R.S says:

        Ah ok, that explains that number. Because I find it hard to believe, that there are that many reservations made right now.

        After the car is out on the streets and in their stores, sure, or after the AWD and performance stats are out, but right now? I’d say everyone who wasn’t convinced the week after the revel, won’t be convinced now. So new reservations should be rather low.

        1. Anon says:

          I can’t believe that you can’t believe in the documented demand for this vehicle.

          Reservations have gone up since the reveal,mainly because:

          1. It’s actually in production now.
          2. Tesla met its start of production schedule. Simply unprecedented. The company is maturing by all accounts and in no danger of ceasing to exist into vapor any time soon.
          3. The drive reviews have (so far) all been overwhelmingly positive.
          4. Tesla quietly released a photo of two large dogs in the back of the Model 3 Trunk. Do not underestimate the power of the Doge.
          5. The base model is still $35k. Cheaper than a GM / LG Bolt, and far more American & sexy.
          6. Performance wise, this thing looks amazing for the money–regardless of who built it or who’s selling it. And every car has its own onboard AI Supercomputer.
          7. Elegant, Disruptive Minimalism that says FU to the current Status Quo in vehicle design. Imagine iPhone vs Blackberry.
          8. Tesla Brand Cachet. Yum yum yum.

    2. Brave Lil' Toaster says:

      Does it matter? Nobody wants to wait an hour and a half for a burger, no matter how good it is.

      1. At the moment, they are making 1 Burger each 5 minutes, but in that time, 20 more people have lined up! Until they can get to 20 Burgers each 5 Minutes, that line will continue to grow!

        Problem is – Some People are hearing about how GOOD those Burgers Are – and are leaving work 2 hours Early to Get one for Lunch!!

        (I used to work near a Red Lobster, and Coworkers would often Leave Work Early, to go there for Lunch, and Come Back Late!)

        Or – in Model 3 Terms, They Delivered 30, on July 28th, and expect to deliver about 100 in August 2017, but – they had at least about 5-6 Days of an Average of 1,800 more Reservations, Net, per day over those Days, already, with No Real Owner Reviews, or Stories!

        Next, they anticipate Delivering just about 1,500 in September, 2017 (or just 1 of those Days worth of New Reservations, but Still short by about 300! so – still not catching up!)

        They want to be delivering to non Tesla Employees, starting in October, but if October is at 2500 units made, that is still just under 1.5 Days worth of Reservations for those few days, even if no more reservations more have arrived since, which I would have big doubts about!

        Maybe bu October they can get up to 1,000 Units of the Model 3 Per Week, or 4,000 Made. Not Likely they could get 100% of them Delivered, so that would still just be about 2 Days worth of those 1,800 per day – NEW Reservations!

        Even if November got up to 2,500 Units made *Per Week* and delivered, that STILL just equals about 1.5 DAYS worth of those Reservations (for that Week of Production)!

        Then – if they actually meet their Goals of making 5,000 cars *Per Week* for the WHOLE MONTH of DECEMBER, that would be enough just to cover – or Equal, about 10-11 Days worth of those New Reservations coming in, at that rate of 1,800 Per Day

        So – let’s say that the rate was just 1,500 per day, and since they come in online and via store visits, count 30 days per month, and you can see, that they need about a production rate of 45,000 Model 3’s Per Month, just to stabilize the Deliveries to Match the Reservations coming in!

        Before or by, November or December, we should be hearing some very interesting Road Trip Stories, or Reviews, or Multiple Sightings, and the General Press will be talking more about the Model 3, maybe in comparison to the Bolt EV Sales Numbers, or other Comparisons, like versus the Target BMW 3 Series, etc., and more people will be reserving them, because of those articles!

        I Predict, it may get much worse in ‘Production Hell’, as orders or Reservations, go up faster than Production can Ramp up, both for Tesla, and their Suppliers, for some time!

        Then – besides the Model 3, there is the Pending Tesla Semi Public Unveiling, and likely an announcement Next Year as to a date for the First Public Unveiling of the Model Y!

        Basically, for Car Buyers that Want an EV, very Few are not thinking of the Tesla, and – many that know of Tesla’s, don’t even know about the Volt or the Bolt EV! Those who want the Bolt EV over the Model 3, might not want it as much, if they have need of long drives in their EV, or if they See a Model Y, as that may suit them better than both the Model 3 – AND the Bolt EV!

        My Model 3, coming to Ontario, Canada, sometime after Mid 2018, will be seeing numerous coworkers, that I work with get rides, maybe drives, etc. So before the end of next year, there will be lots of Model 3 Owners in the province doing the same thing, driving up interest, and reservations more, as well!

        1. James P Heartney says:

          Massive unmet demand will eventually subside. If Tesla builds another factory and floods the market, then eventually prices might fall and Tesla would be left with unused manufacturing capacity.

          This unstable market will clear in time. Tesla will build lots of units, they’ll be bought, and then it’ll be on to the next thing.

          Years ago there was a huge unmet demand for the original Wii gaming console. Scalpers got big premiums, mobs rushed stores that had any inventory, and everybody wanted one. These days you can get one of those same consoles used for next to nothing.

          Eventually Model 3s will be old news, before becoming museum pieces, having been replaced by Level 5 robo-vehicles.

          1. Ct200h says:

            Totally agree that demand will peak , meet the needs of those buyers and then drop off. The real key Tesla could should use is the design and carefully timed release of the Y. Building off the 3 platform ( so glad they are doing this) and tapping the CUV market will be huge if they can pull it off.
            Switching the line at the current plant to a mix of 3 and Y right about 18 to 24 mos from the start of serious production numbers of 3’s yeah that would do it.

      2. John in AA says:

        Except IRL cars aren’t burgers. Some people need a car RIGHT NOW. Those people are not Model 3 customers. Some people need instant gratification. Those people are not Model 3 customers, nor were they Model S customers until recently.

        Then there are those of us who have a car that they’d LIKE to replace, but don’t HAVE to replace, and who are willing and psychologically able to wait to get the thing we want. We are Model 3 customers.

        The burger analogy is cute but one is a consumable and one is a durable good, and the practicalities for the consumer are entirely different.

      3. Nix says:

        Yea, if you don’t want to wait in line to get a table, you make a reservation for a day in the future, because everybody loves that burger.

        This is like a restaurant so good you have to put in reservations a year ahead. If you don’t, you don’t get to eat one.

    3. FISHEV says:

      The “1,800 an hour” thing was just some numbers games, the reservations have been steady since April 2016 at around 450,000 +/1.

      As for advertising, it is fair to say Tesla does a lot of advertising via its increasingly empty “reveals”. No better than the recent one where no official pricing was released, no sales were concluded and 30 cars were provided to employees with no prospect of any further deliveries much less any actual sales.

      But it got HUGE coverage in the media and lots of free advertising as it was designed to do. Clever but it is definitely advertising.

      It is not clear that Tesla will actually sell any Model 3’s in 2017 and instead have the no-sale “deliveries” to employees who are beta testing fully loaded ($60K plus estimated sale price) Model 3’s.

      1. Pushmi-Pullyu says:

        So what you’re claiming is that we should believe a serial Tesla basher like you, rather than our own eyes, about 30 Model 3’s being sold and delivered to people at Tesla’s recent media event. Sold, as in real people actually paid real money for them.

        Got it. 🙄

  2. Murrysville EV says:

    The $4.3 million Nissan spent to gain an extra 1675 sales YTD works out to some $2500 per car; that hardly seems worth it, when it’s already being heavily discounted.

    Their advertising only worsened the losses on that car.

    As for the Model 3, Tesla needs to break ground on another factory soon.

    1. R.S says:

      Better two factories. China will need it’s own for import tax reduction proposes anyways and I think that Europe will be a too big market to keep importing their cars.

      So while making the former NUMMI factory bigger could also work, exporting most of their cars just doesn’t make sense financially.

      1. Pushmi-Pullyu says:

        Yes, Tesla definitely needs two new auto assembly plants, one in China and one in Europe. And according to reports, they are already in negotiations for one in China, and Tesla is at least considering sites for Europe.

        Tesla isn’t just sitting on its hands about seriously ramping up worldwide production and sales.

    2. Nix says:

      Yes, in the Q2 2017 quarterly report conference call Tesla announced that they would disclose the locations of the next Gigafactories by the end of 2017.

    3. Tom says:

      They are playing long ball. Those are new EV customers most likely.

    4. FISHEV says:

      “As for the Model 3, Tesla needs to break ground on another factory soon.”

      Tesla has not produced any Model 3’s in quantity yet and makes around 100,000 cars at a plant that could produce three times that amount.

      When Tesla starts producing cars at the 200,000 a year level, it could look at a 2nd production line at the Sparks, NV facility which has plenty of room.

      I’m hoping to get my 300 mile, AWD Model 3 in 2019 sometime based on reservation made April 1st. I have to put it off until AWD is offered.

  3. vdiv says:

    Can we just stop the “Tesla does not advertise” moniker? It is just not true, they do advertise through various means, even including freaking billboards. They have invested in showrooms and supercharger network. They sell and sometimes give away branded apparel. They hold social events like new product unveilings, factory visits, and weekend socials. They use Twitter, heavily. Project Loveday (you should know something about it) is nothing but free advertising. They have an official Tesla Owners Club organization engaged across the world.

    Tesla does advertise, and I am very happy that they do.

    1. Tech01x says:

      Examine the difference between marketing versus advertising… much of what you mention is marketing. And also examine the costs involved. How much money did Project Loveday cost? Twitter posts? They don’t buy Twitter advertising. They do occasionally do some billboards. But they don’t do the real wallet draining advertising of tv/radio/magazine ads.

      1. vdiv says:

        Keep splitting hairs. Tesla actively promotes their products and spends resources to do so, as they should.

        1. floydboy says:

          Where have you seen Tesla advertising the Model 3? I have yet to see that myself.

      2. Pushmi-Pullyu says:

        How much money did Project Loveday cost?

        Well, something. Tesla did at least have one of their employees play chauffeur and city tour guide for Mr. Loveday and his daughter, and as I recall also paid for a hotel room for the two of them as well as their meals, plus a cosmetic “makeover” for the daughter.

        That may all come to only a few hundred dollars, but it wasn’t free.

        Tesla media events aren’t free for Tesla, either. Especially not providing food for all those people.

        Saying “Well, that’s marketing, not advertising”, appears to be splitting hairs at best. I don’t work in either marketing or advertising (thank goodness!), but it seems to me you can’t really draw any bright line between the two. One blends into the other seamlessly in many areas.

    2. Fiddler says:

      Say vdiv. How much do you advertise? What’s your advertising budget?

      Nothing? Oh come on. Do you have a Twitter account? Email? FaceBook? Do you give to a church, thrift store, family, friends? Do you have stationary or tee shirts with you name on them? Do you take family photographs? Videos? I do. I even have a “business” card with my name, but I am not a business.

      My guess is that you spend a higher percentage of your income on advertising than Tesla does. Yet you have no advertising budget. You think you don’t advertise.

      Companies as big as Tesla spend Billions on advertising. Tesla’s billboards and Twitter post budgets are not within four orders of magnitude.

      1. vdiv says:

        This is not about me, my friend, I am not a business trying to sell products.

    3. Pushmi-Pullyu says:

      vdiv said:

      “Can we just stop the ‘Tesla does not advertise’ moniker? It is just not true, they do advertise through various means, even including freaking billboards.”

      I agree with your main point; Tesla does indeed advertise, and yes it’s becoming annoying to see repeated claims that they don’t. What Tesla does not do is use paid mass media advertising, altho even there I think Tesla is moving from “never” to “not very often”.

      But “Billboards” plural? I do vaguely recall seeing a story about one and only one place where Tesla put a billboard-sized sign up on one of its buildings, but doing a Google image search for [tesla billboard], what I see mostly or perhaps even entirely is advertising companies showing a render (computer image) of a Tesla ad that company made up, Photoshopped onto a photo of an actual billboard.

      And not an actual billboard which exists in the real world.

      But if you do find a real photo of a real Tesla billboard, please do post it here!

        1. Pushmi-Pullyu says:

          Thanks for the links!

          I don’t see anything at your 3rd link that would qualify as a “billboard”, but at least one of those pictures you linked to appears to be real and does qualify as a billboard.

          So I guess it really is time to retire the claim “Tesla doesn’t use mass advertising.” Billboards certainly do qualify, at least in my book!

          1. vdiv says:

            Really not a big secret, there are more, just search for “Tesla billboard images” on Google.

            The point is Tesla’s promotional, advertising, marketing, educational, etc. efforts are comprehensive, are evolving, and should be taken seriously even if some, including the media, the fans, and Tesla themselves, downplay them. Some methods are rather traditional, some have a creative twist, and some are entirely new.

        2. Nix says:

          The first one is not a billboard. That is a temporary wall in a mall while they do construction on the inside of the store. The signage is to indicate what is going into the storefront. It is no more a billboard than the sign over a Tesla store that has already opened is a billboard.

          Second one is a billboard.

          Third one is clearly portable. It goes wherever the portable tent goes in the right of the picture. Not a billboard.

          So one billboard. That seems more like the exception that proves the rule than anything else. Finding just one billboard pretty much proves that Tesla doesn’t have a serious billboard based advertising campaign. One sign does not an ad campaign make.

          1. vdiv says:

            It is a billboard visible especially at night when it is lit from I-270, a rather busy artery in DC, and has been there for a couple of years now, that is not temporary for a billboard. It was put up after the gallery, turned into a store was opened.

            Look for others on Google.

  4. orinoco says:

    Tesla is a bit like the Richard Wagner Bayreuth Festival: extreme shortage/exclusiveness of tickets/cars and some kind of mystery “aura” makes it interesting for people all over the world without any special advertising needed.

  5. Elooney Muskey says:

    But the Tesla owners are spamming my mail boxes for their referral credits, which is illegal in many states. Now those freaks are on nextdoor too, spamming with referral codes and praises for Tesla.
    Don’t know what is worse. Amway type sales pitches or watching a nicely made ad on TV.

    1. floydboy says:

      Considering your posting behavior, perhaps you shouldn’t be calling others names. In which states is spamming illegal?

      1. Elooney Muskey says:

        Not spamming. Using customers as sales people is illegal.
        California DMV warns Tesla its referral program is unlawful:
        http://www.sacbee.com/news/business/article39309483.html

        Virginia cracks down on Tesla’s illegal bird dogging practices:
        https://www.auto123.com/en/news/tesla-motors-bird-dogging/61098/

        Imagine what 80 million Toyota and Honda owners could do if they were allowed to bug others to buy a Toyota and Honda, and offer them some discount.

        1. Pushmi-Pullyu says:

          Tesla did have to alter its original referral program rewards, because it did technically violate “bird dog” laws in certain states.

          But only an extremely trollish, highly mendacious Tesla basher would try to confuse this with “spamming”.

    2. Tom says:

      Having a product others are willing to sell for you without you and you can directly measure and only pay for the actual sales is an amazing thing for Tesla.

    3. Mark.ca says:

      Unfortunately you are definitely full of it…i whis I would be true, considering how big of a troll you are it would be fitting to get spammed like hell from Tesla fanboys.

      1. Elooney Muskey says:

        Dude, we both know who is full of it. It is Elon. Look at all the hyperboles he has spewed over the years.

    4. ffbj says:

      I understand exactly what you mean. Those well made car commercials with the wonderful mountains, beautiful rivers, and attractive people is just exactly like being in a Tesla, certainly not a POS ICE.

    5. Pushmi-Pullyu says:

      “But the Tesla owners are spamming my mail boxes for their referral credits, which is illegal in many states. Now those freaks are on nextdoor too, spamming with referral codes and praises for Tesla.”

      Given your history of extreme and often over-the-top Tesla bashing, there does not appear to be any rational reason to believe a word of that.

  6. ffbj says:

    “Tesla’s products have a captivating impact on consumers and shareholders alike; this advantage will be difficult to replicate. In the minds of its customers, employees, and shareholders, Tesla isn’t just another company. More so than any stock we’ve covered, Tesla engenders optimism, freedom, defiance, and a host of other emotions that, in our view, other companies cannot replicate. As they scramble to catch up, we think Tesla’s competitors only make themselves appear more desperate. With this in mind, even if the Model 3 production launch goes badly, we think customers (and more importantly shareholders) will withhold judgment.” –Al Potter $368 price target

  7. JP White says:

    Advertising is Soooo 20th Century.

    Musk, Trump all have succeeded using their Twitter account. TRaditional advertising is less important for those companies that can generate hype through Twitter. Saves ton of money too.

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