Elon Musk Says Demand For Tesla Vehicles Remains Robust But Flags One Critical Thing That Could Stop It

After Tesla, Inc. TSLA cut vehicle prices this week, fund manager Ross Gerber expressed displeasure over the electric vehicle maker’s resistance to advertising on Twitter. In response, several users — including Tesla and Twitter CEO Elon Musk — chimed in. 

What Happened: “I don’t understand the resistance to advertising when it seems they [Tesla] can create new demand by lowering prices,” Gerber tweeted on Friday. “At some point maybe the public would enjoy all the videos Tesla makes.” 

One Tesla influencer going by the handle @TSLAFanMtl seconded Gerber. Calling Musk’s stance against advertising as stubborn, the user said that, if Tesla were to spend $50 million on advertising, it wouldn’t dent its operating expenditure but instead would generate probably enough demand to avoid the price cuts.

“If Tesla sold 150k Model 3/Ys in the U.S. in Q1, a $1000 cut = $150 million,” the influencer wrote. 

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Affordability Is Key: In another response, Whole Mars Catalog explained Tesla’s aversion to advertising.

“The idea is to make the cars more affordable, not to spend money advertising so that you can make them more expensive,” it tweeted.

Whole Mars Catalog also pointed out that daily active users are more important than actual volume in an era of the “software-defined car.” Tesla is currently in advanced beta testing of its full-self driving software, which ipriced at $15,000.

Musk also reiterated the importance of affordability. Replying to Whole Mars Catalog’s tweet, he said that most critics do not understand that “demand at scale is limited by affordability.”

“There is plenty of demand for our products, but if the price is more money than people have, that demand is irrelevant,” he tweeted.

So many well off critics don’t understand that demand at scale is limited by affordability.

There is plenty of demand for our products, but if the price is more money than people have, that demand is irrelevant.

— Elon Musk (@elonmusk) April 7, 2023

Tesla pursues a direct-selling model and spends zero ad dollars. As opposed to the EV pioneer, other legacy automakers use dealerships and  spend on advertising to lure buyers.

Tesla ended Thursday's session down 0.25% at $185.06, according to Benzinga Pro data.

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Photo: NVIDIA Corporation via flickr