Investment in R&D, Tesla’s technological approach that does not need advertising

Tesla founder and CEO Elon Musk approaches his company as a big tech in which engineering plays a fundamental role. The Tesla R&D investment for each vehicle is higher than that of the rest of the manufacturers. The CEO of the Californian company assures that technology is the best advertising campaign that exists, which is why Tesla’s investment in marketing so far has been zero euros.

At Tesla, engineering is one of the main objectives. The benefits that the automaker has experienced as a result of its investment in them are multifaceted. For Musk’s company, engineering is deeply rooted in research and development testing, helping him determine which designs work and which don’t.

According to the investment consultant The Motley Fool, Tesla invest much more in R&D projects per vehicle than traditional manufacturers. Nevertheless, spends very little on public relations, marketing or advertising. In 2020, Tesla spent an average of $2,984 per car on R&D programs. However, during that same year his advertising expenses were nil. He did not spend a single dollar promoting his product.

By way of comparison, manufacturers as established in the industry as Ford, Toyota, General Motors or Chrysler, owned by Stellantis, spent a considerable amount on advertising for each of the cars sold, but in turn, their investment in R&D It was far inferior to Tesla’s.

In this ranking, Chrysler is the leader with 664 dollars spent on advertising for each car sold. It is followed by Ford with $468, Toyota with $454 and, finally, General Motors with $394. On the other hand, R&D expenses per car sold for each of them were much lower than Tesla’s: Chrysler spent $784, while General Motors, Toyota and Ford spent $878, $1,063 and $1,186 respectively. .

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Investment in advertising and R&D. Image The Motley Fool.

Tesla focuses its visibility to buyers on making cars packed with useful and functional features, relying heavily on its engineering. Once you’ve managed to grab attention, instead of traditional marketing tactics based on multi-million dollar ad campaigns, you rely on word of mouth to make them known and market their designs.

The result of this strategy is that a company that makes cars can impress buyers with its engineering, competing in its market head-to-head with those who employ traditional tactics. This controversial way of doing things has meant that their sales have reached their maximum every year.

In 2020, Tesla decided to dissolve its public relations department, which in no way meant that it fell apart. On the contrary, it continued to rise in its market value to heights that no car manufacturer had reached before. Elon Musk has created a financial giant that currently dominates the electric vehicle market.

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Elon Musk takes a closer look at a FANUC robot at Tesla’s Fremont factory (Flickr: Steve Jurvetson).

The secret is the use of a software developed and implemented entirely by the company itself, which allows you to have full control over your raw materials, develop technologies and scale production volume. With the opening of the two new factories, the one in Austin in Texas and the one in Brandenburg in Berlin, the manufacturer aspires to produce large enough scale vehicles enough to deserve the title of “Giga” that is used so much with it. More specifically, this scaling of production will allow capitalize on all investment in engineering on which the company is based.

Also, the vertical integration of the company It allows you to have much more control over your supply chain, eliminating intermediaries in each and every one of its phases, from raw material to production. The result can be considered as the beginning of a new era for the automobile industry.

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