Under the Hood of Tesla’s Fleeting Foray Into Advertising

As Tesla‘s sales slide, insiders say the automaker left creative ideas on the cutting-room floor without allowing its nascent marketing team to launch its first significant marketing campaign.

Investors were enthusiastic when founder and CEO Elon Musk declared that the business was set to “give advertising a go,” having eschewed it for 20 years. However, 10 months on, the 40-person “global growth” team tasked with delivering on this has been laid off, with former staffers sharing that none of the campaigns they had been working on saw the light of day.

Greg Costanzo, a senior production manager who joined the team in late February 2024, wrote on LinkedIn that people were laid off before “any real creative work or campaigns of our own went live.”

“Although I am disappointed, it was the most gratifying, challenging and invigorating two months of my career,” he added.

A source with knowledge of the matter told ADWEEK that a bigger creative strategy was in the works; the team didn’t get a proper shot at it. The group was still establishing processes and on the brink of shooting its first significant work when the plug was pulled.

Navjeet Gill, a senior performance manager at the brand until this week, wrote on LinkedIn that he was one of the founding members who spearheaded Tesla’s advertising efforts in North America.

“I was described as a ‘one-man marketing team’ since I was responsible for developing strategy and executing marketing campaigns,” he said.

“Since these initial days, the team had grown with world-class talent [who were] developing full-funnel marketing campaigns. Unfortunately, the team was laid off before any of these campaigns were launched,” Gill continued.

But Musk, it seemed, had grown impatient with the early marketing efforts. Confirming Tesla’s decision to axe the department, Musk took to X with his take: “The ads were far too generic,” he said. “Could’ve been for any car.”

Staff were informed of the unexpected decision via an email Sunday as part of a wider layoff initiative targeting more than 10% of the car challenger’s 140,500 employees.

Tesla still has a small pool of marketing staff in Europe, per Bloomberg.

ADWEEK has reached out to Tesla for further comment.

After Musk’s chaotic takeover of X (formerly Twitter) and months of chronic sales slumps for Tesla, investors were buoyed by the prospect that advertising, done well, could help the carmaker bounce back.

But this week’s earnings, showing a 9% drop in first-quarter revenue, underscore some of the wider economic challenges for the carmaker.

Early Facebook marketing efforts

Assembled in December 2023, the advertising unit was led by longtime Tesla marketer Alex Ingram, whose role has also been eliminated.

A central part of the team’s mission was to increase pricing awareness and drive customer engagement. Its inception was revolutionary for the company, which has relied on word of mouth, emails, incentivized referrals and a front-facing CEO in Musk to drive sales.

Within two months, the growth content division—comprising marketers, strategists, creatives and producers—debuted a series of basic ads on Facebook, YouTube and X.

The paid-for content comprised product and feature shots overlaid with captions and music. Some were more playful, including one highlighting the ability to turn the car lock sound into a fart noise.

While it was gearing up for a hard sell, the business spent approximately $6.4 million in 2023 on U.S. digital advertising across search, display ads, mobile, online video and paid social, according to estimates from ad intelligence firm Vivvix. This was a huge uptick on its reported $175,000 ad budget for 2022.

Cutting headcount saves more than $1 billion annually

On Tuesday (April 23), Tesla reported a 9% drop in first-quarter revenue to $21.3 billion from the fourth quarter’s $25.17 billion mark.

Vaibhav Taneja, Tesla’s chief financial officer, blamed slowing global electric vehicle sales, an uncertain economy, production issues and increased expenditures for the company’s first-quarter slump.

Taneja forecasted that the “hard but necessary decision” to reduce headcount would save the company more than $1 billion annually.

Musk took a more existential view of the cuts to marketing and other corners of Tesla when addressing questions from investors on Tesla’s earnings call, equating business operations to human gestation: “A company is like a creature growing,” he said. “If you don’t reorganize it for different phases of growth, it will fail.”

While he didn’t address the marketing team specifically, he said: “We’re not giving up anything significant that I’m aware of.”

Long Averse to Advertising, Tesla Takes a U-Turn. Here’s Why It Matters

However, the brand’s reliance on Musk’s persona to drive brand identity has left it vulnerable to competitors, said Greg Silverman, global director of brand economics at marketing consultancy Interbrand.

“In such situations, a more measured approach is required, involving targeted cuts based on areas of greater or lesser strategic importance,” he said. “But nothing about Tesla’s recent earnings is typical.”