Although Tesla is selling significantly more cars every year- and taking substantial market share- competitors still account for more than 90% of all new car sales.
Up until recently,
$TSLA has been a fairly low volume automaker able to design and manufacture products so desirable that word-of-mouth advertising alone was sufficient to grow sales at >50% per year.
Tesla's "Master Plan" since the beginning has been to make its cars more and more affordable over time, a strategy that has proven successful.
But making products people love and reducing their prices can only drive buyer interest so far, if awareness is low.
Ipsos research published last week by Drive Tesla Canada revealed exactly how severe a problem awareness is for Tesla:
80% of Americans surveyed were unaware how affordable Teslas are today.
It's a mistake to believe that anytime you cut prices, consumers are instantly notified about it. Tesla early adopters' social circles have finite reach, and lower prices cannot motivate buyers who (falsely) believe they can't afford to buy the product.
During the conference call, and on many prior occasions,
@elonmusk has explained that it is a waste of money to buy ads attempting to make people who already want to buy the product want it more, if they still won't be able to afford to buy it. That's true, but incomplete, because it describes only 1 of the 8 groups into which people can be divided across the 3 binary conditions of:
Desirability (do they want to buy it?)
Affordability (do they have the means to buy it?), and
Awareness (do they know it's something they can afford to buy?)
I thought an infographic would aid this discussion, so I created a Venn diagram to illustrate my point:
People in the orange section still won't be able to afford a Tesla, but people in the green section will be happy to learn that they can!
If awareness is currently only at 20%, advertising could double the size of the pink bubble, greatly increasing demand for Tesla vehicles at current prices, among buyers who can afford them.
The blue bubble can also move up and to the left if advertising successfully dispels the misinformation preventing them from buying a Tesla. Food for thought. 🤔