Ford might be poised to pull the plug on EV advertising, according to comments made this week by CEO Jim Farley. But rivals General Motors and Hyundai remain bullish on the role of paid ad spending in the emerging sector, according to interviews Thursday with top marketing executives.

“We think to ignore or bypass communication with consumers during a period of massive opportunity, well, that just doesn't make sense to me,” GM Global Chief Marketing Officer Deborah Wahl told Ad Age.

While Ford has spent big behind its new EVs—including a TV campaign starring Idris Elba when it launched its Mustang Mach-E electric crossover in 2019—Farley suggested at an investor conference on Wednesday that such marketing might be coming to an end, as the automaker shifts to a model that relies more on EV retail experiences. 

“We spend $500 to $600 per vehicle on public advertising. Get rid of all of it,” Farley said at the Bernstein Strategic Decisions Conference. “If you ever see Ford Motor Co. doing a Super Bowl ad on our electric vehicles, sell the stock.”

His comments are eye-opening not only because Ford is a massive ad spender—in 2021 it spent $3.1 billion on worldwide advertising, or 2.3% of revenue, according to its most recent annual regulatory filing—but also because Farley is a former marketing executive. He joined Ford in 2007 as global head of marketing and sales and is known to still take an active role in the company’s marketing moves. 

If Ford follows through on the EV ad cuts, and other automakers follow, it could have serious ramifications not only for media properties that rely on auto ads, but also for agencies that create them. Ford’s agencies include Wieden+Kennedy and BBDO with WPP handling media.

Automotive is the third-largest ad-spending sector in the U.S., behind only personal care and household products and retail, according to the Ad Age Datacenter.

Farley’s Super Bowl comment would appear to be a dig at competitors GM, Kia and BMW, which all ran expensive celebrity-filled spots in this year’s game. GM was a repeat buyer, having also used the 2021 game to push its “Everybody In” EV awareness campaign that seeks to establish the company as a mass maker of electric cars at all price points for various consumer types.

More demand than supply

EV demand of late has not been the problem—it’s more about supply as the automotive industry continues to deal with long-running supply constraints caused by COVID-related plant shutdowns and persistent microchip shortages that have affected vehicles of all types. The situation has caused auto brands to curtail some ad spending, especially sales-driven spots (because there is a less of a need to boost dealership traffic if there are not enough cars to sell).

EVs still only account for about a fraction of the total automotive market, but electric sales continue to gain momentum as nearly every mainstream automaker begins producing more. EV market share reached 4.2% in the first quarter, up from 1.9% in the same quarter last year, according to Edmunds. 

Farley at the investor conference suggested that Ford’s EV sales have been so good that advertising is unnecessary, according to a transcript of his remarks. “We haven't needed [it] for Lightning,” he said referring to the new electric F-150 Lightning, which recently began sales. “Mustang Mach-E we advertised [but]  we took the ads out because we've been sold out for two years.” 

On Thursday, Ford reported that Mach-E in May had its best sales month ever at 5,179 vehicles, up 166% from the same month a year ago, while Ford moved into second place behind Tesla for the month in total U.S. EV sales.

Hyundai is pressing forward with its EV ads despite low vehicle supplies and strong demand. That includes a big-budget campaign starring Jason Bateman touting the Ioniq 5 EV crossover.

“The inventories are challenged but we still want to build up the equity and the nameplates that are electrified,” said Hyundai Chief Marketing Officer Angela Zepeda. “We spent a good amount of money against [the Ioniq] to really get that name out, even though we had practically pre-sold every Ioniq 5 even before we did any Tier 1 advertising,” she said. “We still feel like we want to very much still advertise. Because the inventory shortages won’t last forever.”

Some analysts are skeptical Ford will be able to eliminate EV ad spending in the long term. 

“In light of limited production capabilities, it makes financial sense to shift away from advertising in the short term as many EVs are sold out for the next few years,” said Jessica Caldwell, executive director of insights at Edmunds. But “once there are more EVs available in the market, consumers will be seeking brands with the most compelling selling points—and at that point, advertising will play a more critical role in a brand's identity and success.”

Michelle Krebs, an executive analyst at Kelley Blue Book owner Cox Automotive, noted that new EV models such as the F-150 Lightning, are benefiting now from “so much free publicity.” But “new brands and nameplates must be established and not all can rely on free publicity to do the job. And competition will heat up. New EVs are being introduced constantly. Advertising will be needed to get noticed. Tesla’s path is the dream but that won’t be the path for most brands,” she said, referring to Tesla’s method of avoiding traditional advertising while benefiting from word-of-mouth buzz.

New retail models

Farley, however, made the case for a fundamentally new way to market EVs—one that relies more on creating long-term relationships with customers via retail and digital experiences, and less on the kind of big-budget TV campaigns that auto sector has relied on for decades.

“Our models are messed up,” he said. “We spend $600 to $700 on a vehicle to promote it. And we spend nothing post-warranty on the customer experience.” 

He referenced the auto service business, which he said is profitable for Ford, but added that the company only gets about 10% to 20% of buyers to come back to the automaker’s dealer network for such work. 

“It would be much better if we try to develop an ecosystem where 100% came back, and we gave them experiences and that's our marketing,” he said. “You buy [a] Ford Model e, and after a year, we're going to give you a complete detail of the vehicle, check all your software is up-to-date, you get a complete birthday for your vehicle, we should be doing stuff like that instead of doing Super Bowl ads.”

GM’s Wahl defended Super Bowl ads as “still the largest audience that you can get in one place,” although she added that the automaker is relying on various marketing channels to spread the word about EVs, including influencer marketing and targeted digital ads. 

One of GM’s newest EV ads features LeBron James pushing the electric Hummer.

“We’ll use whatever channel is the most effective in making sure that messages get out to everybody,” Wahl  said, noting that while EV consumer consideration is “moving up dramatically,” buyers still crave more information about EVs and want to be aware of new technologies. “That doesn't really happen on its own, if you are talking about large audiences,” she said. “Our vision is to really make sure [the] EV future is inclusive, that we have an EV for everybody in all shapes, sizes, forms.”

Dean Evans, an executive VP at online auto marketplace Cars.com and former CMO at Hyundai and Subaru, said “there is still a lot of education needed for the average consumer about EVs and that isn’t going to happen without some type of consumer focused communication. It might not be big splash TV advertising like the Super Bowl spots of old, but there will be a need for digital ads, marketplace vehicle listings, webinar style information sessions.”

Tesla’s influence

Like GM, Ford also has aggressive volume goals, seeking to make 2 million EVs globally per year by the end of 2026. It is preparing for the new sales and marketing environment via programs such as Electric University, which Automotive News recently described as a multiday “crash course on all things EV” for salespeople, service technicians and parts department staffers a crash course on all things EV. The company has also split into two divisions—Ford Blue for gasoline-powered vehicles and Ford Model e for EVs.

The business plan for Ford Model e—which Ford has said will have a discreet P&L by 2023—includes creating an “exciting new shopping, buying and ownership experience” for future electric vehicle customers “that includes simple, intuitive e-commerce platforms, transparent pricing and personalized customer support from Ford ambassadors,” Ford stated when the unit was announced in March.

That strategy in many ways borrows a playbook from Tesla, which grew into the dominant EV seller with an approach that includes plenty of digital retail efforts, even if it does not shell out money on traditional ads. 

“Tesla has people interacting much more frequently with their brand,” said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners, a global consultancy. He referenced Tesla’s  “very feature rich” app and “having things like service and repairs be done daily seamlessly through the app,” adding that “they have certainly put money into that.” 

Tesla’s model includes direct-to-consumer online sales—an approach that differs from the dealership model used by traditional automakers such as Ford. 

But Farley suggested Ford needs to adapt, even if it does not do away with the dealer model. “The dealers will be more specialized,” he suggested during the Bernstein conference, while suggesting Ford must boost its online retail, while maintaining a physical presence. He made a comparison to how Target responded to Amazon.

“Target could have gone away, but they didn't,” he said “They bolted on an e-commerce platform and then they used their physical store to add groceries and return -- make returns really much easier than Amazon. They used their expertise as a physical retailer to their advantage, but they modernized the e-commerce piece. So it would be really easy to do business with them. It's exactly what we have to do on the retail side.”