Elon Musk’s Tesla offering referral incentives as EV price war heats up

Electric-vehicle maker Tesla rolled out a new program globally allowing buyers to earn 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 about $500 in cash back for buyers in the US who purchase Model 3 and 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 up to now has focused on real-time adjustments to prices posted on its websites.

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.

“Tesla’s continual actions like price cuts and referrals show we aren’t at an equilibrium yet, with inventory still growing, though at a slower rate, so it’s hard to be confident in the trajectory of future margins,” Needham analyst Chris Pierce said.

Tesla 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% rise in the S&P 500 index SPX.

The stock was down marginally on Friday.

EV production ramp-up issues are likely to be widespread among traditional automakers as they attempt to execute aggressive growth plans, CFRA Research analyst Garrett Nelson said Thursday.

Earlier on Thursday Ford reported a 2.8% decline in second-quarter EV sales.

Tesla remains a “compelling” growth story thanks to its growing vehicle production at plants in Texas and Germany, the upcoming launch of the Cybertruck pickup and construction of another plant in Mexico, Nelson said.

Tesla said Friday it would offer new buyers of its Model Y and Model 3 vehicles in China a cash rebate of 3,500 yuan ($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 ($1,278.00) on Model S and Model X starting July 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 federal credits helped make its electric vehicles more affordable. 

Tesla also achieved record deliveries of its China-made vehicles in the second-quarter.