As Tesla price cuts concede billions, Musk is pushed to spend on ads

By most measures, Gary Black qualifies as a big supporter of electric-vehicle giant Tesla. The Chicago fund manager has had Tesla as his No. 1 or No. 2 holding since he opened his fund in 2021, and often appears on social media (and sometimes CNBC) to talk about it, usually supportively. But there’s one thing Black has had on his mind lately: That Tesla is wasting money on price cuts to keep growth rates high.

As Tesla’s growth in unit sales of its cars and SUVs has lagged and the launch of its Cybertruck pickup has lingered just over the horizon, Black insists that Tesla, really Elon Musk, should abandon a long-standing opposition to spending on major media campaigns instead.

His once-lonely campaign has been picking up allies lately in a domain where Musk pays close attention — social media. An online poll run by @TroyTeslike, another active social-media Tesla fan, found half of the 8,000-plus respondents thought Tesla should start advertising, beating out growth strategies like more price cuts and adding technology to high-end Model S and Model X. 

The investor pressure, or at least nudging, didn’t come out of nowhere. Last May at Tesla’s annual shareholder meeting, Musk looked surprised, if a little amused, when a shareholder challenged him on the issue about 70 minutes in, to the cheers of a crowd dominated by Tesla fanboys.

“525 bucks off of every car this year is half of Netflix’s ad budget, and 1000 bucks is the entire Netflix ad budget and I see their ads everywhere. Why not advertise these things you told us about here?” said Kevin Paffrath, who runs The Meet Kevin Pricing Power ETF in southern California. He specifically referred to safety features including airbag deployment technology as Tesla advantages that might appeal to consumers through advertising.

Musk expressed openness to the idea.

“There are amazing features and functionality about Teslas that people just don’t know about, although obviously a lot of people who follow the Tesla account and my account to some degree, it is preaching to the choir and the choir is already convinced,” Musk said.

Then Musk made a promise. “I think what you are saying does have some merit and I believe in taking suggestions and we’ll try a little advertising and see how it goes,” he said.

The shareholders erupted in cheers, to which Musk responded, “I wasn’t expecting that level of enthusiasm.”

If shareholders expected a major advertising push, they’d be disappointed today. In the months since, according to Wedbush analyst Dan Ives, Tesla has spent very minor amounts on online and social advertising. At the same time, the major price cuts continue as Musk’s primary strategy to drum up more interest in Teslas.

Musk has been a firm proponent of cost-cutting first. As he said at this year’s annual meeting, Tesla’s goals include bringing electric transportation to mass-market consumers, and as…