Tesla Advertising Still Nil, Model 3 Not Pitched At Stores
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 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