Big Auto Still Spends Big Dollars Promoting Gas Cars, Not Tesla Killers

SEP 2 2018 BY EVANNEX 47

BIG AUTO SPENDS BIG ON GAS GUZZLERS BUT WON’T ADVERTISE THEIR ‘TESLA KILLERS’

Okay… guilty. I just used the clickbait term “Tesla Killers” — the media’s catchphrase to hype EVs destined to destroy Team Elon. But are Big Auto’s electric cars really a threat to Tesla? As the press gets swept up in electric concept cars, press releases, and buzzy announcements from legacy automakers, efforts surrounding their existing EVs are kept quiet. More on that in a minute.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: BMW hypes their ‘electrified’ line-up at car shows but shy away from big ad campaigns to promote them (Image: Motor Sport)

First, some background. Electric cars from legacy automakers tend to be compliance cars with strategically low production output. Nonetheless, they still deserve kudos for producing pure electrics. Critics call Big Auto’s EVs nothing more than window dressing and greenwashing. But that’s unfair. These EVs still represent an important step in the transition to cleaner transport.

That said, there’s a troubling new trend — confusing, tricky terminology. News flash: Big Auto’s so-called electrified cars often still use… surprise… gasoline. Are they really committed to a future without fossil fuels? The data shows otherwise. Big Auto’s corporate execs are spending big bucks on gasoline-powered cars (and trucks) with rich investments in their respective ad budgets. Meanwhile, what’s their ad spending on EVs? Those ad budgets pale in comparison.

Above: Understanding the differences between electric and electrified vehicles (Source: CNN Money)

Gina Coplon-Newfield (via Sierra Club) writes, “automakers are doing the bare minimum to advertise and sell electric vehicles — often, even less than the minimum. A recent study commissioned by the Northeast States for Coordinated Air Use Management (NESCAUM) shows that six major automakers in the U.S. (General Motors, Ford, Toyota, Nissan, Volkswagen, and FiatChrysler) are spending almost nothing to advertise their electric vehicles.”

Furthermore, “The report, which looks at 2017 automotive ad spending, shows that in California and Northeast markets as well as in nationwide ads, FiatChrysler didn’t advertise the electric Fiat 500e at all, and Volkswagen didn’t advertise the eGolf at all either. When examining data from California and the Northeast, Nissan, Toyota, and Ford also spent NOTHING on ads for the plug-in Leaf, Prius Prime, Fusion, and C-Max Energi, respectively.” Check out the charts below for more.

Comparing Big Auto’s Gas vs. Electric Ad Spend:

Source: Data above was shared with Sierra Club by NESCAUM, via CompetiTrack, a company that tracks auto advertising activity 

To be fair, Tesla doesn’t spend on traditional advertising either. However, they don’t need to — the Silicon Valley company is dominating market share for both its premium offerings and its lower-priced Model 3. And, Model 3 reservations are in the hundreds of thousands. That said, if “Tesla Killers” are really coming, you’d expect legacy automakers would want to advertise to take back market share. But if Big Auto’s current crop of EVs serve as any indication, that won’t happen.

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Source: Sierra Club

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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47 Comments on "Big Auto Still Spends Big Dollars Promoting Gas Cars, Not Tesla Killers"

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F150 Brian

Include a graph showing ad spending relative to profit and you’ll see they are running their business in a fiscally responsible way, which is exactly what their board and shareholders expect.
If you want that to change, you need to change the economics of the market: government incentives, carbon tax, lower cost of EV components, etc.
We live in a short term minded society. The future may be very different, but today is very much like yesterday

I agree that they are profit motivated and there’s nothing wrong with that. I also think they don’t really have competitive products to Tesla, though. They can’t possibly be blind to this, of course. And they are certainly seeing the Model-3s success. Any traditional auto-maker that doesn’t want to become the next kodak, blackberry, or blockbuster video knows they need to compete in this market eventually. However, I don’t expect to see any advertisements for this until they have a vehicle ready that is actually competitive with Tesla and also makes a profit. If they are unable to figure out how to make a profit, then they are doomed in the long run. So, while they are working on that, they still need to be able to sell the stuff they are making currently. So no reason to push their EV products yet.

John-EU

They don’t spend money on advertising their Teslakillers. What a surprise! It is very simple: these Teslakillers do not exist! (Yet). And what they actually will kill when they finally come available, are their own ICE vehicles.

Very true.

Dima

When Toyota make the Camry a BEV, and when the Honda Accord goes all electric – this is when BEVs will take off. It’s still some years away. I think in 5-10 years we’ll start to see it happening though (fingers crossed).

Ocean Railroader

I suspect Tesla is like that shark from the Meg getting ready to devour the Big Three’s boat and all they do is down play it.

If I were Nissan or GM I would at least be worried about the 6,000 EV’s a week in that there really isn’t much stopping Tesla from getting a pick up truck to market soon.

Especially with pick up’s love of drinking down tons of gasoline and people like me screaming as it devours $70 bucks in gas in a sitting.

theflew

The truck crowd is a lot more difficult. There is a lot of brand loyalty. Ford buyers won’t buy GM or Chrysler because their family only buys Ford. Same with the others. Why do you think Honda and Toyota has such a hard time?

Very true. The Japanese trucks are just a small fraction of pickups sold in the US. Truck buyers will probably be the last converts to EVs (if ever).

G2

…unless they are running their truck as part of their business, then O&M costs will lead the run away from LICE trucks.

JoeInTheUK

Why would they advertise cars they only make a few of that sell anyway ?

In an attempt to try to sell many more! They don’t need to advertise the ICE cars. Everyone is well aware of that tech and those will sell no matter what. I think what people in our space are hoping is that they would shift dollars that are being used to promote ICE sales to promoting EV sales. However, if they don’t have to sell EVs, and they will lose money doing so, there’s very little chance that they are going to heavily promote the EVs. For the automaker’s perspective, it just doesn’t make sense for most of them to push their electric vehicles at this point. However, for the future, they should be … at least from an EV fan’s perspective.

Bunny

But when you see even in the state of Alabama people making a big deal about EV’s , you gotta believe EV’s are making progress!

Henry

The rules of economics will prevail as long as there are enough car makers who produce desirable and economical EVs.

Tesla is the shining example. The more they make cars, the lower the cost to produce them and the more people are exposed to them. Legacy automakers will have to produce either pure EVs or hybrids to compete which will allow people more options to choose. The increasing cost to advertise for gasoline cars and trucks will erode their profit but cannot reverse the trend. It’s only a matter of time until the house of ICE will collapse.

I think 2020 will be that time due to a number of factors:
– The arrival of Tesla Model Y and semi trucks. Also hopefully a Tesla pick up trucks.
– Political change in the US that will reverse anti- environment policies driven by the current administration.
– New EV offerings from Europe and Asia driven by local regulations
– China as the largest auto market that favors pure EV, and where Tesla will have significant presence.

Bunny

Pricing will still be too high in 2020, by 2020 in the US , you’ll still be making small incremental progress, the industry is still way off the parity needed for mass change over to EV.

Probably be in recession by 2020 too, that’s not going to help EV’s at all.

F150 Brian

2020-2022 are going to be very hard years for EVs.
Taxpayers cannot afford to subsidize EV at more than single digit market share and its political suicide to heavily tax gas to fund it.
Battery tech is not advanced enough to enable BEVS at cost parity with mainstream ICE vehicles.
A large number of models come on line during these years splitting sales and reducing economy of scale.
I know it’s not what you want to hear but these are the hump years the market needs to get over.
Sunny days wait on the other side.
Want to vote me down? Take a screen shot and check back in 2-3 years – I’d love to be proven wrong.

Counterpoint

I think mass EV adoption starts with Model 3 mass production. Up until last month, every electric vehicle was niche. But having the Model 3 in the yearly top 50 vehicle sales is going to spur greater investment, which spurs greater adoption.

antrik

As long as combustion cars are vastly outselling EVs, the tax hike on the former doesn’t need to be large to enable significant discounts on the latter. Of course that will be getting tougher as EV sales become more significant — but by that time the price disparity should already be much smaller. I’m not convinced there will actually be a choke point in 2020-2022, or at any time really.

yo

I believe battery tech will be advanced enough by 2020 from a pricing perspective for BEVs to beat ICE on TCO price…
BEVs will most likely take several years longer to be cheaper in upfront pricing…
A certain auto company said they will sell there new BEV for the price of a comparable diesel when it hits the market in 2020 and if so it would win on TCO…

pjwood1

BEVs are already cheaper. Cheaper to fix, cheaper to fuel. That pays back any small price premium quickly.

Usually, it is bad assumptions about losing value faster that get layered onto BEVs. The same car makers above, initially make BEVs much worse than they could be, then add 50% battery capacity to help sink older values.

Tax-incentives also don’t cost owners, where car makers and analysts count them as depreciation.

Get Real

pjwood1 NAILS IT!

The laggard, legacy LICE makers have no intention of doing anything but slow-walking the inevitable transition to EVs.

Meanwhile, people who do the math (and this appears to be only a minority of the population or they are creatures of habit regarding auto purchases), these people who do the math switch to EVs at their next vehicle.

J. L. Brown

For a long time the various talking-heads have touted US $100 / kWh as the break even point for BEVs. If you think that number is credible, and Tesla delivers on its’ US $100 / kWh for cells & US $100 / kWh for packs in 2019, then BEVs will not need to be subsidized in order to grow market share. The individual vehicles do not need to be inexpensive, they just need to be of comparable (or better) LCO to their competitors. The vehicles being traded in for Model 3 already tells us that people are sometimes willing to spend a small premium to get one.

2020-2022 will be great growth years for Tesla; it will have had more time to scale, basically no serious BEV competitors will be made in any volume — and folks who have driven electric (a rapidly growing segment) will know that there just are not any serious ICE competitors. Other BEVs available in that will continue to sell out their entire production in short order, unless actively sabotaged by their dealers or upper-management.

John

Here’s why dealerships and manufacturers will never push electric vehicles:

https://www.businessinsider.com/the-surprising-source-of-car-dealers-profits-2012-2

I spoke with a car salesman recently and he explained to me that a good dealership can keep the lights on with service/maintenance revenue alone. Sales were only a fraction of the bottom line. Seeing how EV’s don’t generate any back-end maintenance even remotely on the scale of ICE, modern day dealerships can’t survive under the EV banner.

Essentially, it’s rats in the maze, protecting the maze.

magama52

Totally agree! I keep telling all these people that say how great the EV’s from legacy automakers are going to kill Tesla when they don’t want to consider the dealers that sales them,(not). Big deal when these EV’s gets introduce with decent sales #’s,,,aka Chevy Bolt when the first few months were being sold, now look at the #’s. Dealers try every trick in the book and succeed on possible customers not to sell their EV’s. No money on it for them. IMHO new EV manufactures with no ICE baggage have a much better chance to succeed than legacy manufactures and also I think that they will follow the Tesla model or very similar.

antrik

The dealership problem is well known. I don’t see why that would affect manufacturer advertising budgets, though…

Jeffrey Songster

Precisely why the dealership model is doomed. Why would folks buy complicated ICE crap once they have enjoyed EV bliss. They have really never added value to any equation except their pockets. Middle men scoundrels.

William

The “Necessary Evil” ICE middle men, have been able to dupe the retail automotive buying public, for many decades now. What would be their altruistic motive, that would have them planning for their own obsolescence?

Maybe “EV bliss”, and empty pockets, will get the ICE Stealerships to begrudgingly EVolve, or pay the ultimate price, and follow the fateful demise of the Dinosaur!

I think this issue is overblown. Remember that dealers don’t make hardly anything on oil-changes, which is the most common maintenance item. They use the low prices on oil changes to get people to bring their cars in so that the service advisers and/or technicians can find something else wrong with the car to up-sale. Sometimes that means inventing an imaginary problem. Just because EVs don’t have oil-changes doesn’t mean they won’t be able to sell people all sorts of repairs and services. It isn’t like EVs never have problems.

John

You completely missed my point. Regardless of what the oil change costs, it HAS to happen. Regardless of the cost of the transmission flush, it HAS to happen . Regardless of the 20,000, 50,000, 100,000 mile mandatory comprehensive maintenance checks, it HAS to happen, etc. Dealerships can set their watch by the maintenance revenue on an ICE the minute it rolls out the door. And every car eventually goes out of warranty, and that’s when the big bucks really roll in. This fact is real, it doesn’t take much research to confirm it. The auto industry is a scam, it came up on a broken model, with many cottage industries (transmission shops, oil change shops, radiator shops, etc) that have emerged to “service” the broken model.

I didn’t say that EV’s don’t have maintenance, but it’s WAY less than a comparable ICE.

Dima

Japanese ICE cars very rarely have to be serviced. Japanese cars are not ruining the car industry, even though they are so reliable and well built they hardly require maintenance.

The issue with BEVs at the moment are the battery prices. Once battery prices fall enough, to make BEVs the same price as equivalent ICE vehicles – this is when sales of BEVs will take off. Hopefully we see take off in the next 5-10 years. But the key is to get battery prices down.

pjwood1

I’d prefer, and pay $400/KWh for batteries in my car. They now cost $100-200.

Cheap batteries are here. People will pay more for better electric drive trains, like they pay more for “granite”. It’s just the auto industry that doesn’t want you to get what you pay for. They like pigs, and they like lipstick.

Pushmi-Pullyu

“Japanese cars are not ruining the car industry…”

They certainly have ruined a large portion of the American car industry. Large areas of Detroit, maybe 30% of the apartment buildings, have been abandoned.

antrik

Detroit saw its first (and biggest) wave of desertion before the Japanese makers ever got on the plan.

John

Then enjoy your Japanese ICE, with its low maintenance schedule. Have a great weekend.

Speculawyer

Don’t expect that to change….they make profits on the gas guzzlers so of course they are going to push those. You can’t expect water to run uphill.

TM3x2 Chris

The early Romans figured out how to run the water uphill. Things are changing already.

DAVID

What I’m starting to notice on social media advertising is a specific lack of mentioning the power-train in vehicle advertisements. Even when directed to the learn more pages, with expanded descriptions of the vehicle features, there’s no mention of the fuel type (petrol/diesel), no mention of engine size.

So I have fun with them and always ask; is it electric? And then wait for their squirmy answer.

Bob Wilson

Efficient cars like EVs, plug-ins, hybrids, and diesels have been running about 4% of the market for nearly the past 10 years. No one could figure out how to capture more gas owners. Then Tesla exploited the EV advantages and that has been a game changer.

There is a reasonable expectation that Tesla Motors will double the efficient car market share by capturing gas owners. As Tesla continues to expand into trucks and pickups, the traditional manufactures will be facing the same future Polaroid and Kodak faced with digital cameras.

The most important Tesla advantage is their SuperChargers. The traditional manufacturers still don’t get it, even now. If their dealers had 24×7, fast DC chargers universally available, they could sell EVs. But they continue to offer weak-tea, L2 chargers available only during business hours.

AP

Not sure I read this quote here or not, Max Planck, famous physicist, said “… science advances one funeral at a time.” Or more precisely: “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.” Young people are far more receptive to new ideas than old fa… like us (I know, speak for yourself) and they are much more accepting of ev’s than the older generation. There’s hope.

Rolando

Just Yesterday here on ‘Insideevs’ was a quote of the Fiat/Chrysler CEO that they are loosing 14k $ on each Fiat 500E, so why on earth should they promote them ?!
So only if compliance request it, EV’s have to be sold at a loss.

Similar in Europe, several journalist tried to test-buy an E-Golf in Germany – and the VW dealers were ‘winding like a fish’ to convince the potential EV buyers to get an Diesel Golf instead, because higher profit margin on sales and much higher maintenance profit for the dealers during the following years.

Even Hyundai is unwilling to produce EV’s on larger scale and reduce their financial losses by delaying delivery of plug-in Ioniq and Kona’s to now already 12 month waiting-time for delivery.

Dima

Toyota, Lexus, Mazda, Subaru and Honda make the best cars in the world. Japanese cars are reliable, well designed and built like tanks. The BEV will take off when these manufacturers move in. Hopefully within the next 5-10 years, it’ll happen.

Johan M

The market decide! Here in Norway, BMW only promote their i3, you almost never see adverts for a BMW ICE car. So it’s not BMW that choose this, it’s the market.

Mark.ca

The market or your government?

antrik

The government sets incentives; it doesn’t decide what companies spend their advertisement budgets on.

Al D

You push whatever makes you the most money. When EV’s become more popular, they’ll start pushing them as well.

John

Sure, but I think it’s the money right now vs. the money later. As ICE sales of tomorrow erode to a competitor that made the switch today, it doesn’t seem very wise. Which will happen. The manufacturers who’ve paid attention to where the puck is going will be better off in the future.

Bill Howland

Car makers spend their advertising dollars pushing their high-markup vehicles. Nothing new to see here.

Its nothing against EV’s as such. I don’t see GM or Ford Pushing their Panel Trucks either, although they quietly make them.

Ron M

US car manufacturers are always late to the party I remember buying Chevys and Fords Pontiacs and Oldsmobile in the 60s – 88. I didn’t listen to friends recommending Toyotas and Hondas. After buying my first foreign car I never went back. The big three for years built cars with planned 3 year life.
Today Tesla is the leader in EV and except for China no one else is even trying. The US better support Tesla or we’ll be buying EV’s from Chiba just like we do with solar panels and everything else.