[timr]

"The whole point of advertising is to make something popular that isn't already or to maintain popularity for something that would otherwise decline in popularity."

You can't push on a string. Consumers buy bigger cars when gas prices are low, and more efficient cars when gas prices are high. It's why Toyota (which has built a brand identity around fuel efficiency) does worse when fuel prices go down.

Marketing can influence consumers' affinity for brands and perception of product quality. It can't change economics.

"Tesla will be perfectly fine on the demand front."

I'm sure there's a market. After all, Lamborghini is "perfectly fine on the demand front", too. But will the demand for electric vehicles justify a valuation on par with General Motors? That's the rub.

[kbenson]

> Marketing can influence consumers' affinity for brands and perception of product quality. It can't change economics.

Actually, I would say marketing is one of the few things that actually can change economics, since it affects perception. Marketing can make someone think they need a new car when they don't, or that a car is affordable than an alternative when it really isn't (given financing, fuel economy, services, etc which are not always taken into account).

People don't make decisions based on reality, they make decisions based on their perception of reality. If you can change that perception, you may change their decisions.

[timr]

You can make all the theoretical arguments you want, but the fact remains: when gas prices go up, sales of trucks and SUVs goes down. And vice-versa.

You think car companies want to change their assembly lines and tooling, if they can magically change consumer buying habits with a bit of advertising? Come on.

[kbenson]

> You can make all the theoretical arguments you want, but the fact remains: when gas prices go up, sales of trucks and SUVs goes down. And vice-versa.

If I was attempting to make an argument against that, I would have done so. You seem to have mistaken my comment as some rebuttal to your entire argument. I just thought one specific point was interesting, but not entirely correct from my point of view.

> You think car companies want to change their assembly lines and tooling, if they can magically change consumer buying habits with a bit of advertising? Come on.

Since you're asking, no, I don't think car companies want to change anything. That doesn't mean they won't be forced to change, and I think being forced to change rarely works out as well as noticing the trends and changing along with, or better yet, slightly in advance of those trends.

It's obvious by the change in types of cars bought based on gas prices that gas prices influence buying decisions for many people. But influence does not necessarily mean control. Many factors go into the decision of which car to purchase, electric or not. Fuel cost is but one of those factors. Tesla has shown that there are people that buy based on other decisions, since the price of a Tesla means that fuel costs are basically moot. Luxury, performance and status are all factors that the automakers and intimately familiar with marketing towards and selling to, usually each to varying degrees with different products. That they've left these areas mostly untapped for electric vehicles after Tesla has shown there is a market, since there were 400k+ Model 3 preorders as of roughly a year ago, leaves many people confused, and I don't think it can be entirely explained away by gas prices. That's enough presales a year ago to be on par with yearly Camry sales. GM is obviously doing something to try to tap into this with the Bolt, but that's still one entry and at the low-end.

[prolly_a_moron]

>But will the demand for electric vehicles justify a valuation on par with General Motors? That's the rub.

Yep. Building cars for the mainstream is a low-margin, capital-intensive business. That doesn't go away because Musk is brilliant.

[elihu]

Most people just need their car to get around and will migrate to whatever is the cheapest option with the capabilities they want. Right now, electric cars cost more. Eventually, they will probably be cheaper than gas. When that happens, the market for electric vehicles will be essentially the same as the market for vehicles. (Gas may still be needed in the medium-near-term for things like pulling a trailer up a long hill.)