Elon Musk may be unable to avoid expensive industry practices such as marketing and price cuts:
. In the second quarter it delivered a total of 466,000 cars, beating analysts’ forecasts . Mr Musk’s promise of 2m sales this year, up from 1.3m in 2022, no longer seems fanciful. On July 15th its first Cybertruck, an angular, retro-futuristic pickup, rolled off the production line. Tesla is about to publicly unveil an expansion plan for its German factory, where it wants to double capacity to 1m vehicles per year.
Unlike incumbent carmakers’ “something for everybody” approach, Tesla manufactures just five models and relies heavily on two of them. The Model 3, a small saloon, and the Modelaccount for 95% of the vehicles Tesla shifts. By comparison, Toyota’s two bestsellers, Corolla and4, make up just 18% of the vehicles sold by the Japanese firm. For Tesla to hit its target of selling a combined 3m-4m Model 3s and Models, each model would need to control 50% of the cars in its class .
Mr Musk may be unable to avoid other expensive industry practices. One is marketing. In contrast to all other big carmakers, which are thought to spend princely sums on ads, Tesla has depended on word-of-mouth and Mr Musk’s own larger-than-life persona to promote its products. Barclays reckons that eschewing ads and, by selling directly to buyers, bypassing dealers, currently saves the company $2,500-4,000 for every car it sells.
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