Elon Musk seems to have the right mix of spending more on research and nothing on advertising.
Elon Musk seems to have found the fight recipe.
The Tesla (TSLA) – Get Tesla Inc Report CEO once compared creating a company to baking a cake.
All the Right Ingredients
“You have to have all the ingredients in the right proportion,” the world’s richest man declared.
Now his dancing skills may leave a lot to be desired, as evidenced by his attempts to bust a move at the opening of Tesla’s Berlin Gigafactory this week, but Musk and his company are cooking up a storm when it comes to research and advertising.
The recipe is simple: spend more money per car than any other automaker while spending nothing–zero, zilch, nada–on advertising.
Ford (F) – Get Ford Motor Company Report and Toyota (TM) – Get Toyota Motor Corp. Report spend $468 and $454 per car on advertising, while General Motors (GM) – Get General Motors Company Report and Chrysler spend $394 and $664 respectively, according to StockApps.com.
Tesla, however, racks up one large goose egg under advertising spending per car, well below the industry average of $485,
So, there are no annoying Tesla commercials interrupting your favorite TV programs, no infuriating earworm jingles that threaten to take up permanent residence in your brain.
Of course, when you have a CEO like Elon Musk, who really needs advertising?
Whether it’s getting jiggy in Berlin, making outrageous promises, or tweeting bizarre–and some might consider offensive–remarks and images, Musk is pretty much guaranteed loads of free publicity.
After all, this the guy who recently called out Russian President Vladimir Putin in response to the invasion of Ukraine.
‘Feedback Loop’
Then there was that time last month when he tweeted a meme linking Canadian Prime Minister Justin Trudeau to Adolph Hitler.
Controversial, yes, but the less Tesla spends on advertising the more it can spend on R&D.
The company drops $2,984 on R&D per car produced, StockApps said.
This is roughly three times the industry average of about $1,000 per car and higher than the collective budgets of Ford, General Motors and Chrysler.
And please note that all of these companies are now shifting over to electric vehicles, something that Tesla has been doing for quite some time.
StockApps’ Edith Reads said in a statement that “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,” she added, “they’ll tell you this is the key to keeping their customers happy—which is what keeps them in business.”
And what does Elon Musk think?
Well, he once said that “I think it’s very important to have a feedback loop, where you’re constantly thinking about what you’ve done and how you could be doing it better.”
“I think that’s the single best piece of advice: constantly think about how you could be doing things better and questioning yourself,” he said.
And Musk also once declared that “people should pursue what they’re passionate about.”
“That will make them happier than pretty much anything else,” he said.
‘Safer Than A Human’
Musk has said that full-self-driving will become the most important source of profitability for the company and he told analysts during Tesla’s fourth-quarter earnings call in January that he would be shocked “if we do not achieve full-self-driving safer than a human this year.”
There have been some rough spots on the road to that full self-driving goal.
The National Highway Traffic Safety Administration has opened different investigations into Tesla, one into its Autopilot driver assistance system and another into its Full-Self-Driving feature.
The agency considers the name “Full Self-Driving” to be misleading.
The company has allowed thousands of drivers to try new and unfinished driver assistance features on public roads in the U.S. through a program called Full Self Driving Beta, or FSD Beta.
News outlets such as CNN, CNBC and the Washington Post all ride-alongs with drivers participating programs and each recording some close encounters of the scary kind with traffic lights, pedestrians and other vehicles.
One of the motorists interviewed compared the experience with “teaching a teenager how to drive.”
“You’re always watching, you’re waiting, you never know when it’s going to try something new,” he said. “And that’s where the anxiety comes from.”
Tesla supports have maintained the self-driving feature is in a testing phase and disengagements are to be expected.
But at least we can watch Elon dance.
