Tesla is proving that its investments in research and development (R&D) is a better investment than advertising. In October 2021, I wrote about a comparison that Visual Capitalist made that showed Tesla’s spending compared with that of legacy automakers such as General Motors, Toyota, and Ford. In that comparison, Tesla spent $0 on advertising but almost $3,000 on R&D per car sold. Visual Capitalist provided this breakdown:
R&D spent per car sold:
- Tesla: $2,984
- Ford: $1,186
- Toyota: $1,063
- General Motors: $878
- Chrysler: $784
That comparison has now been backed up by a study by StockApps.com. Earlier this week StockApps.com released the results of the study and wrote the following:
“Tesla spends more on research and development(R&D) than any other automaker. According to data presented by StockApps.com, the firm spends $2984 on R&D per car produced. That’s thrice the industry average of roughly $1,000 per car and higher than the collective R&D budgets of Ford, GM, and Chrysler per car.”
StockApp’s Edith Reads, who wrote the initial article announcing the results of the study, said:
“Tesla spends more than any other carmaker on R&D in order to maintain its lead in EV technology. And if you ask them about it, they’ll tell you this is the key to keeping their customers happy — which is what keeps them in business.”
In her article, she also added that Tesla’s investment R&D is paying off — and it’s showing. She wrote:
“Its vehicles are not only making strides in environmentalism. They’re also doing so in safety, speed, and technology integration. Elon Musk’s commitment to spending time developing new products and services is what makes Tesla successful.
“Tesla is famous for its ambitious production goals. So if anyone is going to invest in making those dreams a reality, it’s them. And you can see why: while most carmakers focus on marketing themselves as a brand first and foremost, Tesla is focusing on making every car a piece of innovative engineering.
“The EV manufacturer leads in the race to build the future of transportation. One reason for this is their dedication to R&D. Tesla has been taking the car industry by storm with its EVs, which are the world’s best-selling plug-in passenger cars.”
The Importance Of R&D
I’m glad StockApps conducted this study and that this topic is being brought up again. I remember thinking that there needed to be a bit more research on Tesla’s R&D spending when I wrote that other article in October. R&D is clearly playing a key role in the electric revolution, and automakers need to invest more into R&D than into advertising. It’s clearly working for Tesla, which spends $0 on advertising. In that previous article I’d written, I said this:
If legacy auto is serious about EVs, it would spend more on R&D. It would also secure more battery and mineral supplies. It would tone down the chatter and focus more on the products.
This is especially true today, and the new study reflects this clearly.
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