Tesla shareholders will vote on whether the company should do something it's never done before: advertise (TSLA)

May 30, 2020

Tesla shareholders will vote on whether the company should do something it's never done before: advertise (TSLA)

A Tesla shareholder has proposed that the company spend money on advertising for the first time in its history.
Investors will vote on the matter in July at the company's annual meeting, but it's not likely to pass.
Even without ads, Tesla is worth more than most other traditional automakers and demand has largely outpaced production.
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Tesla has never advertised.

So far, that's worked well. Elon Musk's electric automaker is worth more than Ford, General Motors, Fiat-Chrysler and Daimler combined. But one shareholder wants to change the company's tune on advertising.

Shareholders will vote in July on a proposal by an individual investor, James Danforth, who holds 850 shares of Tesla, urging the company to spend "at least $50/car produced" on advertising "in order to increase brand and product awareness and interest."

Danforth argues in his supporting statement that "advertising became necessary the moment Tesla announced in Q1-19 that it would shut down retail stores and start focusing solely on website-based sales instead." Tesla still has some stores, but did scale back its footprint. Danforth also portends a marketing effort could "help mitigate and dilute substantial FUD ("Fear, Uncertainty, Doubt") and misinformation campaigns sponsored by competitors and detractors worldwide."

Tesla's board doesn't agree, and the proposal isn't likely to pass.

Directors are urging shareholders to vote against the proposal, saying it "is based on an apparent misunderstanding of Tesla's retail operations" and that Tesla continues to garner awards and recognition that function as publicity.

Danforth did not immediately respond to a request for comment about the board's stance.

Musk has long said that Tesla did not need to advertise because, unlike most automakers, demand outpaced production.

"We have no plans to advertise at this time," he said in October 2019. "Obviously, at some point in the future, we may do advertising, not in the traditional sense but more to just inform people and make sure that they are aware of the product, but not engage in the typical trickery that is commonplace in advertising."

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