Tesla rolls out customer referral incentive globally as EV price war heats up

Tesla rolls out customer referral incentive globally as EV price war heats up
Tesla sign is seen at the World Artificial Intelligence Conference (WAIC) in Shanghai, China July 6, 2023. REUTERS/Aly Song/File Photo

Electric-vehicle maker Tesla rolled out a new program globally allowing buyers to get extra incentives through referrals from existing customers, a strategy long used by traditional automakers to boost sales.

The incentive, which Tesla dubbed as “Refer and Earn” on its websites, is equivalent to US$500 in cashback for buyers in the US who purchase the Model 3 or Model Y. The US incentives also include three months of its Full Self-Driving feature.

The program was rolled out in Tesla’s largest markets, including the United States, China, Germany, France, Canada, Mexico, Hong Kong and Singapore, according to the company’s regional websites on Friday.

Tesla did not immediately respond to a Reuters’ request for comment on the rebates.

Legacy automakers have historically used employee and loyalty discounts to lower the sticker price of cars.

Tesla, which had previously stopped the referral program as it was too expensive, up to now has focused on real-time adjustments to prices posted on its websites. It revived the referral program recently to boost sales, analysts said.

The EV sales market globally has become more competitive, forcing automakers to cut prices or boost incentives in several markets.

Tesla CEO Elon Musk in April doubled down on the price war, saying the company would prioritize sales growth ahead of profit in a weak economy and amid rising competition.

“Clearly, they’re doing everything possible to boost volumes and take market share,” CFRA analyst Garrett Nelson said on Friday.

The big question is around Tesla’s margins and the consequences of the price cuts it has announced, Nelson added.

The company’s inventory is still growing, although at a slower rate, and so margins remain a concern, Needham analyst Chris Pierce said. Tesla is set to report its second-quarter results on July 19.

The automaker has used its industry-leading profit margins as a weapon in the EV price war, putting pressure on both legacy automakers as well as cash-strapped EV startups.

Tesla shares have more than doubled so far this year, outperforming the 15 per cent rise in the S&P 500 index. The stock was up marginally on Friday.

EV production ramp-up issues are likely to be widespread among traditional automakers as they attempt to execute aggressive growth plans, Nelson said. On Thursday, Ford reported a 2.8 per cent decline in second-quarter EV sales.

Tesla said on Friday it would offer new buyers of its Model Y and Model 3 vehicles in China a cash rebate of 3,500 yuan (US$483.69) if they could cite a referral from an existing owner.

A number of Tesla owners in China posted their referral codes online and invited others to use them.

In the UK, buyers using a referral will receive a discount of 1,000 pounds (US$1,278.00) on Model S and Model X starting Jul 7, the company’s website showed. The discount was for 500 pounds for Model 3 and Model Y.

Tesla, which aggressively cut prices since late last year starting in China, has slowed price cuts on its new orders but increased discounts on its already made cars.

On Sunday, the automaker delivered a record number of vehicles in the second quarter, topping market estimates, as price cuts and US federal credits helped make its electric vehicles more affordable. Tesla also achieved record deliveries of its China-made vehicles in the second-quarter.

Source: Reuters