Age-targeted marketing actually is appropriate in this situation, because Tesla’s current car business is essentially just a preliminary R&D operation. If you view the
entire freaking business right now as a startup in R&D mode that just happens to already be large relative to other corporations and also happens to have a very pleasant property — being organically cash flow positive — then these moves make a lot more sense. Too bad for those of us who made shorter term bets in the face of rough macro headwinds and skittish markets, but that’s a separate concern than questions about how management should run the company.
Investors are much too short-sighted with Tesla. 2023 earnings are pocket change in the long run. Same with ‘24 and ‘25. It always should come back to discounted cash flows and net present value estimates. In this wide view of the totality of the business plan, Model 3 and Y are nearly irrelevant. IRRELEVANT. Negligible rounding errors. I remember in 2017-2019, when I first began to follow Tesla, how much FUD was around about declining Model S & X sales with the 3 coming onto the scene. Now, most investors barely care about these models except insofar as their roles as brand-leading flagships and test beds for new technologies that are still too expensive and hard to manufacture to make it into the 3 or Y. Still, it took years for people in the investment community to really accept that S&X were imminently going to be a negligible portion of the business and profits even though the arithmetic was pretty simple to do. We have a strong bias for focusing on the known stuff we already have and
hyperbolically discounting the future rewards of a long-term strategy.
We need that same kind of mental recalibration for 3&Y now too, considering that, unsurprisingly, people are suffering from similar myopia. Gen 3 is what matters.
Forget for a moment the whole “FSD and other future revenue will accrue long term profits” debate. Another critical part of this blitzscaling-even-at-0%-margins strategy is that every additional vehicle Tesla produces is contributing to improving the entire business to better prepare for the future years that actually matter. Every additional car means more kaizen on the manufacturing line and more data flowing through that shiny new Tesla OS at every stage of the value chain. S3XY cars are primarily for learning and for generating enough free cash flow to fund the investments for Gen 3 and the moonshot AI bets. Any free cash flow they happen to generate beyond this is just a minor bonus.
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How does this feed into not doing something like TV advertisement that’s essentially marketing mostly to older people?
1) They are greatly outnumbered by younger generations
2) In the 2030s and beyond, many of them will be deceased or no longer driving cars
What I care most about from a marketing standpoint is what 10-year olds, who are just starting to be old enough to take interest in cars and technology, are thinking. That is the critical target market. Not adults over 40. I also care about what cars young celebrities and rappers are bragging about driving, and Tesla appears to be winning there too. What are young professional athletes buying? Oh that’s right, Teslas.
While investors may not be able to make up their minds about Tesla, with its stock whipsawing in recent days, the electric carmaker has a strong base of fans within the NFL.
www.cnbc.com
As far as I can tell from anecdotal experiences, Tesla is overwhelmingly dominating the interest and desire of kids and young adults with respect to vehicles, at least here in the US. As long as that’s still true, I am not concerned about demand.
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