Elon Musk says Tesla will advertise for the first time
New York (CNN) — You're about to see a lot more about Tesla.
CEO Elon Musk told company shareholders Tuesday that the company will advertise for the first time in its history.
"We'll try a little advertising, and see how it goes," Musk said in response to a shareholder at the company's annual meeting in Austin, Texas, Tuesday.
The crowd was overwhelmingly positive about Musk and Tesla (TSLA). But none of his promises — from the tease of two new products he anticipates introducing next year, to a vow to remain Tesla (TSLA)'s CEO for the foreseeable future, — received as positive a reaction from the audience as his advertising decision.
"I didn't realize people wanted it that much," he said about advertising later in the program.
The decision is a complete turnaround for Tesla and Musk. The billionaire CEO has for years suggested there is no need for the company to advertise because, he claims demand for the vehicles outstrips supply.
"Tesla does not advertise or pay for endorsements. Instead, we use that money to make the product great," he said in a 2019 tweet.
In an interview on CNBC following the meeting, Musk said advertising was not something he had decided to do until he was asked about it at the meeting.
One thing that has changed for Tesla is greater competition from existing automakers, all of which have devoted much of their advertising budget to electric vehicles, even for vehicles that are not yet available for sale.
The increased competition, plus rising interest rates, has led to a series of price cuts by Tesla so far this year. Those price cuts have squeezed margins for Tesla, even though it remains more profitable than traditional automakers.
His Twitter purchase also may have changed his mind about the value of advertising. That platform previously earned more than 90% of its revenue from advertising before Musk purchased it. Twitter has since seen advertisers flee the platform.
"It's indeed ironic that Twitter is highly dependent on advertising," he said about his past views on advertising, and what he now faces in trying to bring advertisers back to Twitter. "I guess I should say, 'Advertising is awesome and everyone should do it.'"
Musk laughed after that comment, as did the crowd.
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