Comparing Tesla’s Spending on R&D and Marketing Per Car to Other Automakers
- Tesla spends $0 of its budget on advertising, but instead spends a dramatic amount on research and development (R&D)
Tesla’s Spending Per Car Sold vs. Other Automakers
It’s often said that word of mouth is the best form of advertising.
In the case of Tesla and their rapid ascent to the top of the global automobile business, this might be true. After all, the electric vehicle company somehow manages to spend $0 on advertising year after year, despite the fact that marketing is typically a significant expense line item for most other auto manufacturers.
On the flip side, Tesla is spending an average of $2,984 per car sold on research and development (R&D)—often triple the amount of other traditional automakers.
|Automaker||R&D spend per car sold||Ad spend per car sold||R&D per dollar of advertising|
On this per vehicle sold basis, Tesla’s $2,984 in R&D spend per car is far greater than that of other car manufacturers. It’s even higher than the collective amount going to R&D per car from three of the other automakers (Ford, GM, and Chrysler) combined.
When it comes to advertising, the average spend among traditional automakers is $495 per vehicle. And while Tesla technically spends nothing on advertising, the company is a marketing machine that is rated as the world’s fastest growing brand, and Tesla often dominates press mentions and social media chatter.
Capital Allocation: R&D and Advertising
The balance of expenditures between R&D and advertising is part of capital allocation, a decision every business needs to make. Generally speaking, more R&D can improve and advance the quality of either your goods or service, relative to your competitors. If executed correctly, it has the potential to lead to greater pricing power that will reflect in the margins.
In contrast, advertising can spread awareness and promote the business. But it’s a tricky balance that isn’t always easy to get right.
While capital allocation is vital, one factor that differentiates Tesla from the rest, is Elon Musk himself. With over 60 million followers on Twitter, his wild popularity has no doubt aided in Tesla’s brand recognition, where they’ve arguably become synonymous with the electric vehicle revolution.
Automobiles Of Tomorrow
For Americans, 85% still use an automobile as their primary method of transportation to work. As a result, automobiles will likely undergo a serious shake up as the world continues on its path towards a greener future.
With increasing investments made in the electric vehicle space—poised to be worth a trillion dollar market by 2028—how will R&D and advertising budgets of tomorrow look for major automobile companies?
Where does this data come from?
Source: 10-K Filings
Notes: Data covers automobile figures for 2020
The 10 Longest Range EVs for 2023
This infographic lists 10 of the longest range EVs currently for sale in the U.S. in 2023. The Lucid Air takes first place at 516 miles.
- EV models with over 300 miles (480 km) of range are becoming more common in the United States
- The Lucid Air (Grand Touring trim) has the highest EPA range at 516 miles (830 km)
The 10 Longest Range EVs for 2023
Range anxiety is frequently cited as one of the biggest turnoffs of electric vehicles (EVs).
Even as recent as 2021, the average range of an EV was just 217 miles (349 km), falling significantly short from the average gas car’s range of 413 miles (665 km). Thankfully, as this infographic shows, EVs with over 300 miles of range are becoming more common.
Below are the top 10 EVs for 2023, ranked by their EPA combined driving range. For further context, we’ve also included price. These values are for the specific trim that achieves the stated range. In some cases, more expensive trims are available but have a lower range (e.g. Tesla Plaid).
|Model||EPA Combined Driving Range||Price*|
|Lucid Air||516 mi (830 km)||$138,000|
|Tesla Model S||405 mi (652 km)||$84,990|
|Hyundai Ioniq 6||361 mi (581 km)||$45,500|
|Tesla Model 3||358 mi (576 km)||$55,990|
|Mercedes-Benz EQS||350 mi (563 km)||$104,400|
|Tesla Model X||348 mi (560 km)||$94,990|
|Tesla Model Y||330 mi (531 km)||$52,990|
|GMC Hummer EV Pickup||329 mi (529 km)||$110,295|
|Rivian R1T||328 mi (528 km)||$74,800|
|BMW iX||324 mi (521 km)||$87,100|
*Most recent prices available as of April 2023
Note that the EV market is rapidly evolving, and the data in this table has a limited shelf life. For example, Rivian is releasing a battery option dubbed the “Max pack” which promises up to 400 miles, but is not yet EPA rated.
Where Does This Data Come From?
Source: Car and Driver (range), manufacturer websites (price)
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