Californian automaker Tesla Motors is known for many things, including its super-fast, long-range luxury Model S electric sedan, its mall-based Tesla Stores, over-the-air software updates and upgrades for customers’ cars, and of course free charging for life throughout its ever-expanding network of Supercharger stations.
What it is most definitely not known for is offering discounts. Save for the obvious price reduction on low-mileage ex-demo and service-fleet cars — as well as the occasional discount on soon-to-be discontinued models in inventory — new Tesla customers generally pay full list price for their car, regardless of who they are or where they’re from.
Yesterday however, that changed with the announcement that Tesla will offer existing customers up to $1,000 for persuading their friends to buy a brand-new model S.
What’s more, the first Model S customer in each of Tesla’s key regions of Asia-Pacific, Europe and north America to make ten referrals resulting in the purchase of a brand new Tesla Model S will win themselves a brand-new Tesla Model X crossover SUV. Due to enter production this fall, the Model X offers seating for seven, along with all-wheel drive, sporty performance and a range in excess of 250 miles per charge.
Those who make ten referrals in their market but who aren’t the first will earn themselves the right to purchase a fully-loaded Founder Series Tesla Model X — a special edition model not available to the general public. Moreover, they’ll be able to at the price of an entry-level Model X. While Tesla Motors [NASDAQ:TSLA] has not yet released a price for the Model X, Musk says the difference between a Founder Series and an entry-level Model X is about $25,000.
Those who make just five referrals will receive an invite plus one for the opening of the Tesla Gigafactory, which is due to take place some time in April next year.
Talking on a conference call after the announcement, Tesla CEO Elon Musk said that Tesla Model S referral program will initially run until the end of September 2015 as something of an experiment for the company. After that, Tesla will evaluate the success of the “short-term experiment” to see if it is worth replicating on a more permeant scale.
It’s long been known in the plug-in world that owners make the best electric car advocates, with plenty of anecdotal stories about early adopters who have convinced their friends and family to make the switch to an electric car after experiencing it for the first time.
Indeed, here at Transport Evolved, we suspect our editorial team has been responsible for a fairly large number of friends and family making the switch to electric vehicles after spending some time in one or other of the Transport Evolved plug-in fleet.
Yet Tesla’s decision to offer referral discounts isn’t just about helping the company ensure a continued flow of new customers to the brand. Nor is it just about leveraging the experience and enthusiasm of its current customer base.
It’s also about creating good vibes.
According to Musk, every new Tesla Model S sold in its Tesla Stores costs Tesla an average of about $2,000 once building fees, operational costs and salaries have been taken into consideration.
While selling Model S cars to customers through existing owners is no cheaper, Musk said that both new and existing customer get to benefit, since the person being referred gets a $1,000 discount off their new car while the person doing the referring gets a $1,000 Tesla credit.
The result? Both customers feel warm and fuzzy about being given a discount for their trouble, something which has long been known to breed customer loyalty in the business world.
There’s also an even more important reason that Tesla has decided to implement this trail program: auto dealer associations.
Despite a fairly steady run of wins against pro auto dealer legislation in a variety of states where auto dealer associations lobbied their local legislature to ban Tesla from operating its own stores and service centres, there are still a number of states in the U.S. where the electric automaker is prohibited from selling direct to customers.
States like Texas, which has the largest automotive market outside of California but remains resolute that Tesla must use third-party franchised dealerships in order to sell to customers there.
To date, Tesla has circumvented states with anti-competitive auto dealer law by operating Tesla Galleries, where customers can find out about electric cars in general but can’t order a Tesla Model S, arrange a test drive, or even ask about pricing.
Its referral program, carried out on a personal word-of-mouth basis, ensures that potential customers can grab an unofficial test drive with a friend or relative without falling foul of auto dealer law.
“It’s a guerrilla tactic against car dealers in certain states,” said Musk yesterday. “I don’t want to characterise that as the main reason [for doing this], but it could be something that helps us.”
Sadly, the program is only open to existing Model S customers — not Roadster owners — and is only valid for purchases of new Tesla Model S models, not used cars or the upcoming Model X. But if you’re in the market for a brand-new Model S and happen to know someone with a Model S already, perhaps now’s the time to hook up for a test drive.
To find out more about the Tesla Model S referral program, interested owners can head to Tesla’s new dedicated web page detailing the program.
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