Tesla has started an experimental referral program meant to capitalize on what it says has always been one of its best tricks for selling cars: word of mouth. From now until October 31, new Model S customers will also get $1,000 off their purchase if they’re referred by an existing owner.
This should help the company get around a problem it’s been working on for years: How to reach buyers in states that ban its approach to selling cars.
The electric car company doesn’t work with dealerships, like most automakers. It operates its own stores, selling directly to customers. That’s a problem in some states that have laws requiring the dealer franchise model, so Tesla’s been fighting a legislative battle on a whole bunch of fronts, which at the moment include Texas and Arizona—where Tesla reps aren’t allowed to sell cars at all.
If you refer five new buyers, you get to tour the Gigafactory in Nevada, where Tesla’s building batteries. Refer 10, you get to buy a “Founder Series Model X,” with all the options at no cost, and personally inspected by Musk. Be the first to refer 10 and you get the Model X SUV for free.
This is a way for us to have a guerrilla battle with some of the car dealer associations.ELON MUSK
“This is a way for us to have a guerrilla battle with some of the car dealer associations,” Musk says. It’s a bid to make existing customers—a particularly enthusiastic fanbase by industry standards—into de facto sales people. “It certainly could be something that helps us where we are still held back by local legislation.”
“If we can amplify word of mouth, then we don’t need to open as many new stores in the future.”
It costs Tesla about $2,000 to sell a car through a store, Musk says, when you count the cost of building and operating the place. So that’s how it decided to give that amount back to its buyers who’ll be ordering cars online through the referral program. “Anything we can do to improve those fundamental costs is something we want to pass on to customers. We don’t make our car expensive arbitrarily.”
Tesla’s not giving up on its basic approach to sales, though. “We’ll still keep opening stores, it’s really just about how many stores do we open,” Musk says. And he emphasizes the referral program is and experiment, and if it’s not satisfied with the results, it’ll happily move on to trying other new ideas.