{"id":10119,"date":"2023-05-17T18:53:35","date_gmt":"2023-05-17T22:53:35","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/tesla-to-begin-running-car-ads-for-the-first-time\/"},"modified":"2023-05-17T18:53:36","modified_gmt":"2023-05-17T22:53:36","slug":"tesla-to-begin-running-car-ads-for-the-first-time","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=10119","title":{"rendered":"Tesla to Begin Running Car Ads for the First Time"},"content":{"rendered":"
\n

\n Tesla
\n \u2018s annual shareholder meeting has wrapped up and the biggest surprise wasn\u2019t about succession planning, or Twitter, or even about products. The bombshell was about advertising. <\/p>\n

In response to a shareholder question, Tesla (ticker: TSLA) CEO Elon Musk said his company would try running some ads. The crowd at the shareholder meeting Austin went wild. Musk said he was surprised by the reaction. <\/p>\n

\n

Tesla stock is up 1.4% in Wednesday premarket. Shares closed up 0.1% Tuesday at $166.52 a share. The
\n S&P 500
\n and
\n Nasdaq Composite
\n closed down 0.6% and 0.2%, respectively. <\/p>\n

Investor might like the news, but ads show again that the bigger that Tesla gets, the more it begins behaving like a traditional auto maker. <\/p>\n

The first example of Tesla\u2019s metamorphosis into a larger auto maker was first-quarter profit margins. Tesla\u2019s decision last year to spur sales with price cuts ate into profitability. The first-quarter operating profit margins came in at about 11%, down from north of 19% a year ago.
\n Toyota Motor
\n \u2018s (TM) fourth-quarter operating profit margin came in at almost 10%.<\/p>\n

Now there is advertising. Smaller auto makers such as
\n Ferrari
\n (RACE) don\u2019t need to advertise. They have no problem selling out. But Ferrari sales are measured in the tens of thousands. Tesla\u2019s are now measured in the millions and growing.<\/p>\n

In the past, Musk has said that Tesla didn\u2019t need to advertise as demand always exceeded supply.<\/p>\n

Through Tuesday trading, Tesla stock is up roughly 35% year to date.<\/p>\n

Musk said in response to a question about pricing that Tesla adjusts price, essentially, based on real-time information about order rates. Tesla delivered a record amount of cars in the first quarter. Musk believes the Tesla Model Y will be the best-selling car in the world, electric or traditional, in 2023, but the price had to come down to do it. <\/p>\n

\n Ford Motor
\n (F) and
\n General Motors
\n (GM) spent $2.2 billion and $4 billion on advertising, respectively, in 2022. The $6-plus billion figure represents roughly 2% of combined 2022 sales. That\u2019s an expense, but GM and Ford, of course, believe they get branding and sales benefits. <\/p>\n

Down the road, investors will have the chance to evaluate just how effective any ads are. Musk told CNBC\u201ds David Faber that ads should be truthful and aesthetically pleasing. <\/p>\n

Coming into the meeting, investors were more interested in hearing about how Musk planned to spend his time, especially after he recently named a new Twitter CEO to replace him in that post. He said Twitter was a short-term distraction and that it was in a stable place, adding he doesn\u2019t need to devote a lot of \u201cincremental time\u201d to his social media platform. He also added that he planned to stay Tesla CEO. <\/p>\n

The advertising news will likely trump the succession concerns. They might trump product issues too. Musk said there are a few new products he is excited about. The humanoid robot Optimus was one he highlighted. Investors are familiar with Optimus, but Tesla showed off new videos of the robot moving around. Musk added he believes the majority of Tesla\u2019s value in the future would be derived from the robot. <\/p>\n

Another product is likely a smaller car, but details were thin. A new Tesla model has come up at meetings a few times recently. Details, to this point, about have new model have always been thin. The next model to ship with be Cybertruck which is due to be delivered later this year. <\/p>\n

Below are some other tidbits from the 2023 annual meeting, along with some historical context. <\/p>\n

Succession, Not the TV Show <\/h2>\n

There are a few reasons investors have been thinking more about succession. Twitter has a new CEO, Tesla board chair Robyn Denholm put out a video stressing the strength of Tesla\u2019s management and board, and Musk appeared on CNBC. <\/p>\n

The Board<\/h2>\n

Japanese businessman and investment professional Hiro Mizuno didn\u2019t stand for reelection to Tesla\u2019s board. Tesla co-founder J.B. Straubel was nominated to replace him. He served as Tesla\u2019s chief technology officer from 2005 to 2019. Today, Straubel is running his EV battery materials company Redwood Materials. <\/p>\n

He was elected to the board. <\/p>\n

Other Product Notes<\/h2>\n

Musk said Tesla would move to 48-volt electrical architecture. That\u2019s an \u201cinside-baseball\u201d reference for car wonks. Essentially, car electrical systems have been based on 12-volt architecture. Going to 48-volts can make things more efficient and save on copper usage. <\/p>\n

Write to Al Root at allen.root@dowjones.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Tesla \u2018s annual shareholder meeting has wrapped up and the biggest surprise wasn\u2019t about succession planning, or Twitter, or even about products. The bombshell was about advertising. In response to a shareholder question, Tesla (ticker: TSLA) CEO Elon Musk said his company would try running some ads. The crowd at the shareholder meeting Austin went […]<\/p>\n","protected":false},"author":1,"featured_media":9578,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-10119","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nTesla to Begin Running Car Ads for the First Time | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Tesla \u2018s annual shareholder meeting has wrapped up and the biggest surprise wasn\u2019t about succession planning, or Twitter, or even about products. 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