Quick-thinking Tesla Motors Changes Tesla Referral Program to Comply With Virginia Auto Dealer Laws

In the few weeks since Tesla CEO Elon Musk announced Tesla’s new Model S referral program and associated Tesla Model X competition, we’ve seen social media networks inundated with referral links from Tesla owners eager to earn themselves a little Tesla bonus for helping a friend, family member or co-worker buy a brand-new Tesla Model S electric sedan.

Referring your friend to Tesla means they'll get $2,000 discount in Virginia.

Referring your friend to Tesla means they’ll get $2,000 discount in Virginia.

Under the trail program, those who buy a Model S as a consequence of a friend’s referral earn themselves a $1,000 discount off the price of their new car, while the person doing the referring gets $1,000 in Tesla credits that can be used against servicing or maintenance costs at a Tesla service centre, or on official Tesla merchandise or accessories at a Tesla Store. Those who make five successful referrals resulting in a new Model S purchase earn themselves a ticket for themselves plus a guest to the Tesla Gigafactory opening ceremony later this year, while the first people in Europe, North America and Asia to make ten successful referrals win themselves a brand-new Tesla Model X. Those who make ten referrals but aren’t the first in their market will instead be offered the chance to buy a Signature Series Model X for base-model price.

So far, so good. But while the Tesla Referral Program might help Tesla Motors [NASDAQ:TSLA] experiment with a new way to sell its luxury electric car in states like Texas, where Tesla’s preferred direct-to-consumer sales model is banned, the clever tactic has landed the Californian automaker in a little trouble with the Commonwealth of Virginia, where an existing law prevents compensating people who are not licensed auto dealers from selling new cars.

The practice, known as “bird-dogging” is currently illegal in the state, meaning the only people in state who can actually receive any kind of commission or compensation for selling new cars are people who work for licensed auto dealers.

Outdated dealer legislation is to blame yet again -- but Tesla's solution this time is simple.

Outdated dealer legislation is to blame yet again — but Tesla’s solution this time is simple.

As Tesla’s head of communications Ricardo Reyes told Bloomberg Business last week, the statute in question was written onto the books some time ago to prevent rouge salespeople from taking back-handers for selling a particular make or model of car.

“Not from preventing friend from recommending products they love,” he said.

Unlike some of Tesla’s other legal challenges however, the solution to complying with Virginia’s bird-dogging law was a simple and easy fix to Tesla’s program within the state.

Instead of offering existing customers $1,000 in Tesla credit every time a friend or family member ordered a new Model S, Tesla says it will now give that $1,000 ‘referral’ fee to the new customer instead, meaning those buying a Model S in Virginia will get a total of $2,000 off list price.

Given how enthusiastic most Tesla Model S drivers are about the car and the brand as a whole, we’re guessing very few Virginian Model S owners will feel slighted about missing out on their own $1,000 financial reward for referring someone to the brand.

Besides, we’re guessing helping a friend get an additional $1,000 off the price of a new Model S is worth a fair few rounds of drink, favours, or perhaps a good home cooked meal, right?


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