A Tesla Model X with its doors open is showcased in a showroom. Gary Black, a fund manager from Chicago, has been a strong supporter of Tesla and has held Tesla as his top or second top holding since he started his fund in 2021. However, Black believes that Tesla is wasting money on price cuts to maintain high growth rates. He suggests that Tesla, specifically Elon Musk, should reconsider their opposition to spending on major media campaigns. Black’s campaign has gained support on social media, with a recent poll showing that half of the respondents believe Tesla should start advertising. At the Tesla annual shareholder meeting, a shareholder challenged Musk on the issue of advertising, which led to Musk expressing openness to the idea. However, since then, Tesla has only spent minor amounts on online and social advertising while continuing with major price cuts. Black argues that Tesla should prioritize advertising to promote features like the falling cost of EVs and safety features. He believes that price cuts alone are not sufficient to drive demand and that Tesla’s market share among EVs has been slipping. Additionally, the recent price cuts have affected Tesla’s gross margins. Black suggests that a Tesla ad campaign should focus on identifying the benefits customers are looking for, targeting specific buyer segments, and connecting with buyers on what they care about. He points out that Tesla is now competing with experienced marketers, like Ford and General Motors, who have invested heavily in advertising their EVs. Black believes that advertising could help sustain Tesla’s luxury brand image and address the misconception that Teslas are too expensive. Ultimately, Black and other proponents of advertising argue that it’s worth exploring whether advertising can help Tesla achieve higher sales volume and operating margins.
Tesla’s price reductions cost billions as Musk is compelled to invest in advertisements
