Tesla
seems to be exploring new ways to sell cars. What investors should make of that isn’t clear.
New Tesla (ticker: TSLA) electric vehicles are now listed on
Cars.com
(CARS), a website that lists new and used cars. Listing used cars isn’t noteworthy. Car buyers can always find used Teslas on Cars.com. But new listings are something else. Car buyers clicking through new listings eventually end up on Tesla’s website to complete the order.
Cars.com and Tesla didn’t immediately respond to a request for comment about the listings.
Why is this happening, and what does it mean for Tesla investors?
The why could be part of Tesla’s commitment to try out traditional advertising. These aren’t TV commercials, but it is traditional advertising. Dealers use Cars.com to help sell cars. Tesla, of course, is both a car dealer as well as a car maker.
What the decision means is a more interesting question. It could mean nothing if it’s just Tesla dipping its toe into traditional dealership advertising waters.
It could mean something if Tesla is struggling to sell cars, but that would be a stretch. Tesla did post disappointing third-quarter delivery results, but the market largely shrugged off the numbers, attributing it to planned plant downtime.
Tesla delivered about 435,000 units in the third quarter, down from about 466,000 in the second quarter. Tesla needs to deliver some 475,000 vehicles in the fourth quarter to hit full-year guidance of about 1.8 million deliveries.
Pursuing traditional advertising could also mean that Tesla is finished cutting prices. That would also be something for investors who have been frustrated with how price cuts have hurt profit margins.
Tesla cut prices significantly at the start of 2023 to help drive sales growth. CEO Elon Musk has said cuts were partly designed to manage affordability amid rising interest rates. Tesla may believe it’s reaching the limits of the impact price cuts can have so the company is trying ads.
Whatever the reason, it’s an interesting development.
Tesla stock was up 2.1% in Friday trading, while the
S&P 500
and
Nasdaq Composite
were up 1.5% and 2%, respectively.
The Cars.com ads appear to be responsible for Tesla stock’s Friday gains; Cars.com shares seem to also caught the updraft, rising 1.5%.
Write to Al Root at [email protected]
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