Automotive manufacturing. Pixabay Image.
When it comes to the automotive industry, marketing, advertising, and promotional expenses play a crucial role in driving sales and creating brand awareness.
Automotive companies, including Tesla, Ford, and General Motors, allocate a significant portion of their budget to these activities, aiming to differentiate themselves from their competitors and attract potential customers.
Through various marketing and advertising strategies, automotive companies such as Tesla, Ford Motor, and GM try to showcase their products and services’ unique features and benefits.
Additionally, promotional activities such as events, sponsorships, and discounts help create a buzz and generate consumer interest.
In this way, marketing, advertising, and promotional expenses are essential tools for automotive companies to stay relevant and competitive in today’s fast-paced market.
This article explores the marketing, advertising, and promotional expenses of automotive companies such as Tesla, General Motors, and Ford Motor.
Let’s look at the numbers!
Investors interested in R&D spending comparison may find more resources on these pages: Tesla R&D vs GM and Ford R&D.
Please use the table of contents to navigate this page.
Table Of Contents
Definitions And Overview
O2. How Does Tesla’s Marketing, Advertising, And Promotional Spending Differ From Ford And GM?
Marketing, Advertising, And Promotional (MAP) Expenses
A1. Tesla
A2. General Motors And Ford Motor
As A Percentage Of Revenue
B1. MAP Expenses To Total Revenue Ratio
As A Percentage Of Total Costs And Expenses
C1. MAP Expenses To Total Costs And Expenses Ratio
As A Percentage Of SGA Expense
D1. MAP Expenses To SGA Expense Ratio
Summary And Reference
S1. Conclusion
S2. References and Credits
S3. Disclosure
Definitions
To help readers understand the content better, the following terms and glossaries have been provided.
Marketing, Advertising, And Promotional Expenses: Marketing, advertising, and promotional expenses refer to the costs incurred by automotive companies in promoting their products and services.
Marketing activities involve creating a brand image, developing marketing strategies, and conducting market research to understand consumer behavior and preferences.
Advertising involves making and disseminating messages about the product or service through various channels such as television, radio, print media, and digital platforms.
On the other hand, promotional activities are short-term tactics used to attract customers and generate sales. These include events, sponsorships, contests, discounts, and other methods.
These expenses are essential in creating brand awareness, driving sales, and maintaining a competitive edge in the automotive industry.
How Does Tesla’s Marketing, Advertising, And Promotional Spending Differ From Ford And GM?
Tesla’s approach to marketing, advertising, and promotional spending significantly differs from that of traditional automakers like Ford Motor and General Motors.
Tesla, led by CEO Elon Musk, relies heavily on word-of-mouth, social media presence, and Musk’s substantial social media following to generate buzz and interest in its vehicles. This strategy is bolstered by the unique Tesla ownership experience, innovative product launches, and mission-driven approach focusing on sustainability and the transition to electric vehicles.
In contrast, Ford and General Motors have historically invested substantial sums in traditional advertising methods, including television commercials, print ads, and digital marketing campaigns. These companies allocate significant portions of their budgets to marketing and promotions to maintain brand awareness, launch new models, and compete in various automotive segments.
Financially, Tesla spends a fraction of what Ford and General Motors allocate to marketing and advertising. For instance, Tesla has reported spending essentially $0 on advertising in several financial disclosures, emphasizing their reliance on organic growth and direct sales model.
Meanwhile, Ford and General Motors spend billions annually on global marketing and advertising efforts. This disparity in spending highlights Tesla’s unconventional approach to market penetration and brand building, which has proven effective given its rapid growth and high brand recognition without traditional advertising expenditures.
This difference in strategy reflects broader trends in the automotive industry and consumer behavior. Tesla capitalizes on digital engagement and direct customer relationships, while traditional automakers like Ford and General Motors balance modern digital campaigns and traditional advertising strategies to reach a diverse consumer base.
Tesla
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Tesla spends significantly less on marketing, advertising, and promotional activities. Tesla’s spending on these activities is approximated at $96 million in fiscal year 2023, compared with $78.9 million in 2022, and $90.3 million in 2021.
On average, Tesla has spent around $100 million or less annually on marketing, advertising, and promotional activities. Since fiscal year 2019, Telsa’s average spending on marketing, advertising, and promotional activities has reached $76 million per year.
Although Tesla’s spending on marketing and advertising is significantly smaller than those of GM and Ford, the figures have been steadily rising, as depicted in the chart above, reaching around $100 million per year in recent periods.
General Motors And Ford Motor
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On the other hand, General Motors and Ford Motor spend considerably on marketing, advertising, and promotional activities, with figures reaching billions of dollars, as shown in the chart above.
For example, GM’s marketing and advertising expenses totaled $3.6 billion in fiscal year 2023, while Ford’s spending reached $2.5 billion, according to the respective annual reports.
These figures were $4.0 billion and $2.2 billion, respectively, in fiscal year 2022.
On average, General Motors’ spending on marketing and advertising activities has been sligtly higher than Ford’s figures. Over the last five years, GM has spent an average of $3.5 billion annually, while Ford Motor has spent $2.8 billion annually on average.
MAP Expenses To Total Revenue Ratio
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From the revenue perspective, Tesla’s spending on marketing and advertising activities were significantly lower than Ford Motor and General Motors. As shown in the chart, Tesla’s marketing and advertising to revenue ratio came in at just 0.1% as of 2023. In other words, Tesla spends only 0.1% of its total revenue on marketing, advertising, and promotional activities.
On the other hand, GM and Ford allocated about 2.3% and 1.5% of their automotive revenue, respectively, on marketing, advertising, and promotional expenses in fiscal year 2023. Their ratios were much higher than Tesla’s.
A noticeable trend is the decreasing ratios for all automakers. For example, Ford’s ratio has decreased from 3.5% in 2014 to 2.3% as of 2023, while GM’s ratio has plunged from over 3.0% in 2014 to 1.5% as of 2023. Tesla’s ratio has gone from 1.5% to 0.1% during the same period.
The decreasing ratio has implied that these automakers have been spending less on marketing, advertising, and promotional activities with respect to their revenues over the years.
MAP Expenses To Total Costs And Expenses Ratio
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Tesla’s marketing, advertising, and promotional spending make up only a tiny portion of its total costs and expenses. As shown in the chart, Tesla allocated just 0.1% of its total costs and expenses on marketing and advertising activities in fiscal year 2023.
In fiscal year 2023, GM allocated about 2.4% of its total costs and expenses on marketing, advertising, and promotional spending, while Ford’s ratio decreased to 1.6% as of 2024. Among all automakers under comparison, GM has the highest spending budget on marketing and advertising activities with respect to its costs and expenses.
However, the ratio to total costs and expenses has been declining for GM, Ford and Tesla, as depicted in the chart. The declining ratio suggest a shrinking budget of these automakers for marketing, advertising, and promotional spending.
MAP Expenses To SGA Expense Ratio
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All automakers’ marketing, advertising, and promotional spending reside within the selling, general, and administrative (SGA) expenses.
That said, Tesla’s marketing, advertising, and promotional spending is estimated to comprise only 2% of its SGA expenses in the last several years, the lowest among all automakers under comparison. This ratio has significantly decreased since 2014, from nearly 10% to just 2% in the latest results.
On the other hand, a hefty 36.6% of GM’s SGA expenses was spent on marketing, advertising, and promotional activitities during 2023, while Ford’s figure came in at 23.4% in the same period.
GM’s ratio has remained relatively constant but has been declining over the last several years. Ford’s ratio also has steadily decreased since 2014, possibly indicating a shrinking marketing and advertising budget.
Conclusion
To recap, Tesla spends less than US$100 million on marketing, advertising, and promotional expenses. On the other hand, Ford and GM spend billions of dollars on marketing, advertising, and promotional expenses.
Ford and GM spend a considerable portion of their SGA expenses on marketing, advertising, and promotional costs, while Tesla’s spending on marketing, advertising, and promotional activities has been negligible.
References and Credits
1. All financial figures presented in this article were obtained and referenced from annual and quarterly reports, investor presentations, SEC filings, earnings reports, press releases, etc., which are available in the following links:
– Tesla Investor Relations,
– Ford Investor Relations,
– GM Sec Filings.
2. Pixabay Images
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