Comparing Tesla’s Spending on R&D and Marketing Per Car to Other Automakers

TruckElectric

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Comparing Tesla’s Spending on R&D and Marketing Per Car to Other Automakers

Tesla Cybertruck Comparing Tesla’s Spending on R&D and Marketing Per Car to Other Automakers f5e2bdf936ade652343cdd82dc7a85d6?s=46&d=mm&r=

Published
22 hours ago
on
October 11, 2021
By
Aran Ali


Tesla Cybertruck Comparing Tesla’s Spending on R&D and Marketing Per Car to Other Automakers RD-vs-Marketing-DS-Main-1

The Briefing
  • 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.
AutomakerR&D spend per car soldAd spend per car soldR&D per dollar of advertising
Tesla$2,984$0$0
Ford$1,186$468$2.53
Toyota$1,063$454$2.34
General Motors$878$394$2.22
Chrysler$784$664$1.18
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


https://www.visualcapitalist.com/co...rd-and-marketing-per-car-to-other-automakers/
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firsttruck

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The R&D comparison between Tesla having R&D per car of $2,984 and all the others brands is not valid.

R&D is a fixed cost type expense. Production scale is most important factor.
All the legacy OEMs mentioned ship 5 to 10 times more vehicles with which to spread the R&D costs.

Once Tesla reaches similar scale (5 million and up), Tesla might have per vehicle R&D around $1,500.
 

firsttruck

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The biggest difference is Tesla spends 100% of R&D on 100% pure BEVs, FSD, AI, Solar, and now AI TeslaBOT.

The legacy OEMs spend 95% of R&D budget on ICE vehicles, ICE engines, ICE engine fuel efficiency controls, ICE engine pollution emission control, ICE multi-gear ratio transmissions, ICE exhaust systems, ...

The legacy OEMs spend most of their R&D on stuff that will be soon be unprofitable & will go from high volume production to much lower level.
 
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A.W.Jelfs

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The biggest difference is Tesla spends 100% of R&D on 100% pure BEVs, FSD, AI, Solar, and now AI TeslaBOT.

The legacy OEMs spend 95% of R&D budget on ICE vehicles, ICE engines, ICE engine fuel efficiency controls, ICE engine pollution emission control, ICE multi-gear ratio transmissions, ICE exhaust systems, ...

The legacy OEMs spend most of their R&D on stuff that will be soon be unprofitable & will go from high volume production to much lower level.
Hi all from Australia, legacy OEM spend nothing on anything related to ICE R&D, all money now is spent on EV R&D. I would suggest software support for ICE is declining rapidly as well.
The writing is on the wall for legacy OEM and they need to spend billions trying to build new production lines.
OEM's will not have access to a giga press as Tesla has locked in all supply.
Apart from all that 2022 is fast approaching and that means so is the Cybertruck.
Make no mistake the beast is coming next year and 2023 will be the year most of us will see delivery.

Cheers Asa
 

firsttruck

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Hi all from Australia, legacy OEM spend nothing on anything related to ICE R&D, all money now is spent on EV R&D.
Sorry that is clearly not true. Most of the legacy OEMs are today still spending significant amounts on ICE. Some have admitted they still have full ICE R&D going on. Almost all are doing gas/electric hybrids so that also entails significant ICE R&D.

Looking at my original post I probably should have mentioned a time period, 2004-2019, for my 95% figure.
Cumulatively 2004-2019, Tesla might have spent more on R&D for BEVs than all the legacy OEMs added together did for BEVs (not fuel cells).
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