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Is Online Marketing Sufficient For Tesla’s 2023 Needs?

Tesla is renowned worldwide for its $0 marketing approach. Is it sufficient, though, to obtain the company’s far-reaching goals when bundled with other mitigating factors?

In a January 2, 2023, SEC filing, Tesla revealed that in Q4 it produced over 439,000 vehicles and delivered over 405,000 vehicles. In 2022, vehicle deliveries grew 40% YoY to 1.31 million, while production grew 47% YoY to 1.37 million. The company acknowledged that it continues to transition towards a more even regional mix of vehicle builds, a goal which led to a further increase in cars in transit at the end of the quarter. Nonetheless, the company missed its ambitious target of achieving 50% growth year over year and would have needed 1.4 million deliveries to achieve that threshold.

Tesla continues to explore methods to overcome transportation and logistics challenges as well as to better utilize its online marketing approaches. However, the company’s online marketing approaches, innovative and unique among its competitors, may be weakening in 2023 as variable economic forces infuse uncertainty into the automotive world.

Tesla’s Online Marketing Approach: Still Rare among Rivals

Tesla is renowned worldwide for its $0 advertising approach. Previous to the post-Covid economic declines of 2022, Tesla was not intimidated by emerging successes of its rivals; instead, it concentrated on dominating the all-electric automotive sector while attaining its long-term goals. To do so, it diligently avoided depending on paid advertising and, instead, relied almost exclusively on online marketing. That approach has worked very well for the company for the past decade.

Tesla has meticulously promoted its mission and vision about transitioning the world to sustainable transportation and sustainable energy on its website, maintaining consistent messaging about product excellence. Over the years, Tesla online marketing strategies have also focused on improving customer experience as much as possible through mechanisms that personalize the Tesla brand. A popular online referral program, though, was halted in 2021 in the US.

Unlike most other automotive companies, Tesla has embraced the social media influence of its mercurial CEO Elon Musk, necessarily embracing his authentic and oft-controversial persona as a means to stay in the headlines.

Challengers in China Push Tesla: Online Marketing Adaptations

Tesla altered its online marketing approach in China in late 2022 as a result of unexpectedly robust domestic competition, which forced disparate demand and threatened Tesla’s growth plans in the world’s largest EV market.

  • Insurance subsidies of as much as $1,100 for new buyers were posted on Tesla’s online marketing Weibo account.
  • The company reinstated a user referral program. Owners who participate are rewarded with small gifts like wireless headphones or strollers. They also have the chance to win a visit to the Shanghai factory or the free use of a Tesla for a year.
  • Potential customers were invited to nominate cities where Tesla would bring its cars for potential buyers to test drive; select entries would gain use of a Model 3 for a week.
  • Breaking with well-documented aversion to traditional advertising, Tesla advertised on a local TV shopping channel!

Some of this online marketing outreach has emerged in response to previous local media criticism that described Tesla as “arrogant” toward its Chinese customers.

As reported by Bloomberg Hyperdrive, such online marketing decisions were concurrent with Tesla’s decision to cut prices across its Chinese catalog for the first time in 15 months in October 2022. Pressures such as persistent Covid restrictions diminished Tesla shares, which sank to a two-year low in which they lost almost half of their value in less than two months. Shifts came after the company upgraded its Shanghai factory in order to double capacity to about 1 million cars a year, even as the target of 50% annual global sales growth came into question.

Other issues such as China’s property market slowdown and Europe’s energy crisis also seemingly affected the cumulative stats of the all-electric car company.

Other domestic automakers stepped up their appeal to consumers by offering features like built-in karaoke systems, fragrance dispensers, luxurious customer service, and a range of low-cost vehicles. China’s domestic car companies accounted for almost 80% of EV sales through the first 7 months of 2022, according to Reuters.

South Korea Fines Tesla for “Exaggerated and Deceptive” Online Marketing

Tesla has incurred a $2.2 million fine from South Korea’s antitrust regulator. The accusation? Cold weather reduces driving range of its EVs by up to about half of what is advertised online.

In 2021, a South Korean consumer group said the driving range of most EVs drops by up to 40% in cold temperatures when batteries need to be heated. Nam Dong-il, spokesperson for the Korea Fair Trade Commission (KFRC), explained, “This is due to false, exaggerated, and deceptive advertisements on driving ranges, performance of superchargers, and reduction in fuel costs for its electric vehicles.” Of cumulative data shared from the country’s environment ministry, Tesla’s vehicles fared the worst of its rival EVs.

The Tesla website does not mention the loss of driving range in sub-zero temperatures. It does offer cold weather driving tips, such as pre-conditioning vehicles with external power sources and using its app to monitor energy consumption.

Bloomberg notes that Tesla changed the advertisement on its Korean-language website in February when the KFTC started an investigation.

Additionally, Tesla will incur another penalty — 1 million won — for violations of the Electronic Commerce Act, saying the carmaker didn’t provide enough information to consumers on its cancellation policy.

By the end of September, Tesla had sold 45,812 electric vehicles in South Korea since opening a local office there in 2015, according to the transport ministry. Tesla is the 3rd highest selling EV brand in the country, with a local market share of 13%. The two automakers ahead are domestic manufacturers Hyundai Motor Co. and Kia Corp.

The tension between the South Korean government and Tesla comes amidst the backdrop of a possible siting of a new Tesla gigafactory in the nation. South Korea is known for its developments in battery technology, with its LG Energy Solution being one of the largest and leading EV battery companies in the world, SK Innovation being another, and Samsung SDI being a third.

Tesla Korea didn’t immediately respond to requests for media comment.

Final Thoughts about Tesla and Online Advertising

Tesla stock plunged 65% in 2022, its worst annual decline by far. Shares crashed 37% in December to their lowest levels since September 2022. The EV giant did rebound from midweek bear market lows to end the week roughly flat. Tesla stock fell more than 12% today, Tuesday.

After market close on Wednesday, January 25, 2023, Tesla will issue a brief advisory containing an online link to the Q4 and full year 2022 update. The link will be available on Tesla’s Investor Relations website. Tesla management will hold a live question and answer webcast that day at 4:30 pm Central Time (5:30 pm Eastern Time) to discuss the company’s financial and business results and outlook.

In 2023, Tesla will benefit from new US tax credits of up to $7,500. If the tumultuous pattern of Tesla’s stock valuation continues in 2023 and Tesla continues to miss (even slightly) sales guidance, new approaches to brand awareness and approval may be needed. Questions may arise as to whether the company’s online marketing approach is, in fact, sufficient to obtain the company’s far-reaching goals when bundled with other mitigating factors.

 
 
 
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Written By

Carolyn Fortuna (they, them), Ph.D., is a writer, researcher, and educator with a lifelong dedication to ecojustice. Carolyn has won awards from the Anti-Defamation League, The International Literacy Association, and The Leavy Foundation. Carolyn is a small-time investor in Tesla. Please follow Carolyn on Twitter and Facebook.

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