No Advertising Required: Tesla Model 3 #1 In Revenue On Its Own

OCT 26 2018 BY STEVEN LOVEDAY 29

Tesla Model 3 sales continue to prove the unimaginable.

We’ve provided a multitude of articles about the incredible success of Tesla Model 3 sales this year. Deliveries got off to a rough start and lasted for many months when the car was first released. Production bottlenecks meant that only a handful of vehicles made their way into owners’ driveways by the end of 2017. Tesla has since resolved most of the issues and is now delivering Model 3 sedans at an epic rate.

While it’s incredible to see the progress Tesla has made with Model 3 production and deliveries, there’s a whole lot more to the story that makes it significantly compelling. Let’s not forget that Tesla doesn’t advertise. The automaker has no traditional dealerships and there are still several states in which it is not even allowed to sell its cars. Tesla doesn’t really stock inventory cars. Additionally, Tesla offers no discounts on its vehicles and accepts no endorsements. Remember, electric cars are not popular, sedans don’t sell in the U.S., and Tesla vehicles are not cheap.

Meanwhile, traditional automakers do all of the above to sell cars. Thousands of dealerships across the country stock thousands of cars and offer special lease programs and financing deals or huge markdowns off MSRP on a regular basis. Automotive advertising plagues television, radio, and the internet. Legacy automakers are free to sell their cars in all states and endorsements are very common. We could go on and on here about the situation. Yet, the all-electric Tesla Model 3 is proving itself as a U.S. best-seller month after month. “Wow” is not an appropriate word to describe how significant this is.

Let us know your thoughts in the comment section below.

TESLA MODEL 3

Tesla Model 3 Performance - Dual Motor Badge
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Tesla Model 3 Performance Tesla Model 3 Performance Tesla Model 3 Performance Tesla Model 3 Performance - Midnight Silver Tarmac Motion (wallpaper 2,560x – click to enlarge) Tesla Model 3 Performance - White Interior - Wide Tesla Model 3 Performance - White Interior - Touchscreen 2. Tesla Model 3
Range: 310 miles; 136/123 mpg-e. Still maintaining a long waiting list as production ramps up slowly, the new compact Tesla Model 3 sedan is a smaller and cheaper, but no less stylish, alternative, to the fledgling automaker’s popular Model S. This estimate is for a Model 3 with the “optional” (at $9,000) long-range battery, which is as of this writing still the only configuration available. The standard battery, which is expected to become available later in 2018, is estimated to run for 220 miles on a charge. Tesla Model 3 charge port (U.S.) Inside the Tesla Model 3 Tesla Model 3 rear seats Tesla Model 3 Road Trip arrives in Tallahassee Tesla Model 3 charges in Tallahassee, trunk open.

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29 Comments on "No Advertising Required: Tesla Model 3 #1 In Revenue On Its Own"

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TM3x2 Chris

The TM3 is a car without any serious competition at this time. It will continue selling at record levels until there is something on the market to match its range and performance for the same (or lower) price.

REXisKing

Reminds me of the original Ford Mustang, the new Corvette on the market, and the launch of the Camaro. None required advertizing.

Maybe this is why Lutz is so tight.

Vexar

Lutz is busy preparing his masterpiece for CNBC right now. He will demonstrate how all of these figures are askew and the profit numbers are excused because of some imagined technicality, and ultimately, he will say Tesla is still doomed, doomed he will say!

TJKR

Lutz is combing his toupee at home as he waits for CNBC to summon him.

Vexar

His famous words, about a month ago:
https://www.barrons.com/articles/bob-lutz-tesla-interview-1537397034
I hope Inside EVs gives us advance notice of upcoming Bob Lutz interviews. That way I can invite the local Tesla Club over and we can pop some popcorn and watch history in the making when he speaks.
This month, he started selling Hummer in China.

Deepak

I really don’t think that no competition alone makes a difference.
I think we need to add the people’s intentions toward the company which is difficult to put it in numbers.
I know many people who were against Tesla but all it took for them to come to Tesla was just one drive.
Somewhere I had read that you buy a Tesla you can ride the attitude of Elon while you buy any car, you just drive a car. I think this statement is adding at least 20-25% of sales of Tesla. My personal opinion

Vexar

The buy rate for a test drive with the Model S held steady at 25%. ICE dealers fought very hard in perhaps every state in the nation because this was an early nail in their brand new coffin.

Benz

Tesla Model 3 deliveries in Q4 2018 will be about 70,000.

TM3x2 Chris

I hope it will be more than 70k. In December alone, Tesla might deliver 40k TM3s.

Taylor Marks

Uh… hate to burst your bubble, but there’s absolutely no way that Tesla is going to deliver 40K Model 3s this December. That would require Tesla to deliver 1290 cars per day every day in December. Their best month so far was September, with 742 cars per day. There’s no way that in a span of 3 months they’re going to increase deliveries by 73%.

They’re constrained by battery cell production. Panasonic is ramping it up as quickly as they can – they might manage a 30% increase by the end of the year. Tesla also introduced the midrange Model 3, which should boost production by another 25% or so if they stop making any other variant of the car. Combined, that’d be 1206 cars per day, or 37K in December. That’s a wildly optimistic number that assumes no hiccups of any sort, plus a weird decision to make mid-range Model 3 instead of more profitable variants of it.

More realistic is probably 28-32K in December.

TM3x2 Chris

Your numbers make sense in terms of production constrains. Deliveries – that’s entirely different. If Tesla can pull off producing 40k TM3s ready for delivery in December than I think delivering 1290 cars a day should be possible. There are around 80 Tesla stores in the US, each would have to deliver 16 cars a day.
Call me an optimist.

Will

No but 76k-78k model 3

101101

Nah needs to be higher to knock out Camry and I think it will be.

ffbj

Mostly I agree with this assessment, but no paid endorsements? Their referral program skirts the issue, but the recipients of the benefits of those programs, while not receiving cash, are getting cars, perks, other benefits, that are cash equivalents.
Tesla could counter that these you tubers are just rabid fans and are being rewarded accordingly for their efforts.
That they would endorse the product regardless of pecuniary benefits to themselves, which may be true, but would they be as motivated. Not trying to knock Tesla, just pointing out the obvious.

Vexar

We call them referral whores.

earl colby pottinger

I would bet if if you added all costs for the car ads during just Super-Bowl it would come out to more money than all of Tesla’s perks.

Pushmi-Pullyu

Mr. Google says that for the 2018 Superbowl, a 30-second ad cost $5 million. I don’t know how much Tesla has spent on giving away free cars and other perks for its referral contests, but $5 million would buy a lot of perks! That would buy more than 100 of the lowest optioned Mid Range Model 3’s.

ratnacage

Tesla doesn’t actually give away “free cars” (99% sure). What they do give away is free charging, battery powered replica cars like the kind a 5 year old would drive on the sidewalk, and other memorabilia.

Mike

I looked up average cost of advertising by manufacturer. When you go to a Jag dealer, realize that Jag will spend on average $3000 in advertising to sell any car/SUV on the lot. Many of the premium brands are in the $2000 range. Honda and Toyota are towards the bottom at about $300-400. Do some simple back of the envelope math of 16 million cars sold annually in the US and let’s say $1000 per car for advertising. That is 1.6X10^10 a year in advertising. I guess you can add the advertising industry to the list of businesses that Tesla is disrupting.

A couple of other interesting points raised by the article. Consider the effect of all that money focused at convincing people they “need” an SUV or pickup truck. I visited France last month and I was amazed that during the entire time I saw one mid-sized pickup truck. Yet the Model 3 is a 4-door, midsize, electric sedan. That thing shouldn’t sell.

GE

Maybe that’s why there’s no love in the mass media for Tesla.

John

I think this fact is lost on so many. Tesla has done ZERO paid advertising in their existence. What would GM and Ford give to not have to pay an advertising budget??

Pushmi-Pullyu

Hmmm… zero paid mass advertising. They certainly do use advertising; every media event and publicity event is paid advertising. And Elon’s tweets are mass advertising; just not paid mass advertising.

GE

I took my Model 3 to our weekly Friday night Farmers Market/Hot Rod Cruise In recently. I was parked next to a Corvette with a fully blown chromed out ICE sticking up through the hood. There was an interesting contrast between that and my empty frunk. The gas boys were literally fuming and grumbling over all the attention my gorgeous Mabellene was getting. People would look at the frunk and then walk back and look in the trunk for an engine. Then the questions started. I think I may have sold a few Tesla’s.

Vexar

That has to be one of the best car names I have heard in a year. I assume she’s red. Get used to the attention if you can, but please keep going to these events, your referrals are duly earned!

GE

Nah! She’s blue, I hope she’ll be true.

Mark.ca

Tesla doesn’t pay for advertisements but i think they should pay you guys for your efforts.

orinoco

As Musk broke his promise for a tow hitch on the Model 3, this was a significant adverse-advertisement for me not to order it. Same month I ordered an VW e-golf despite Dieselgate, with extra discount and a standard Golf tow hitch can be easily mounted.

101101
This was an excellent article but I think it still understates the case. Model 3 revenue in the US last month was equal to Accord and Camry combined, the perrineal #1 and #2 top sellers. And Model 3 should out sell Camry very soon on monthly sales and accelerate that gap making it the best selling car in the US. And the trade ins show up sells! This utterly destroys any demand argument. First, we never saw pent up demand for autos before. Then we saw customers hold their breath waiting, testing that demand, then we see the up sell! And we see all this on product alone. A friend who drives a late model F150 dragged me out of the office yesterday to show me a black Model 3 with aero rims. He said he’d get different rims but he wanted one immediatly. I told him I’d sat in one at the mall. He told me he had too. He asked me if they took trade ins. I said yes. I said if you want a base model as in 35k you might be looking at 6 months if you pre order (as I type this I realize I… Read more »
Robert

That would have been true on the XX century, we are on the XXI, though. The nature of advertisement have changed.