Do you own a Tesla? Do you also have friends who can afford to own a Tesla? Do you have five to ten friends who can afford to own a Tesla? If you answered yes to at least the first two questions, Tesla has an opportunity for you.
Today, Tesla is launching what is perhaps the most high-stakes referral program in recent history to determine whether the company can depend more on word-of-mouth sales than physical stores. To initiate the 90-day experiment, Tesla CEO Elon Musk is asking existing customers to refer the Model S to their friends in exchange for $1,000 toward their next Tesla purchase. Their friends, in turn, will get $1,000 off their current purchase. And if an existing Model S or Roadster owner successfully refers five friends, they have won the proverbial golden ticket — a trip to the chocolate factory.
"If five of your friends order a Model S, you and a guest will receive an invitation to tour the Gigafactory in Nevada – the world's biggest factory by footprint – and attend the grand opening party," the email to current customers reads.
While this may seem like a drop in the bucket compared to the actual price of the Model S, which can range from $70,000 to more than $100,000, it's potentially a way to leverage the tight-knit community of owners the company has been able to cultivate into less costly infrastructure for the company.
Though the program is temporary, Musk hopes it will shed light on how much of its resources Tesla has to invest in opening brick-and-mortar stores. The idea is that the more effective word of mouth is, the fewer stores Tesla has to open.
"We're just going to try it out," Musk said during a press call. "If it works out well long- term we'll keep going; otherwise we'll say that was an interesting experiment and move on."
If the experiment is effective and word-of-mouth sales are amplified, it could be great for the automaker, which has notably avoided marketing or advertising its cars and is also facing local regulations in several states that prohibit Tesla representatives from selling vehicles directly in those jurisdictions.
"This is a way for us to sort of have a guerrilla battle with the car dealer association," Musk said during the call. "Tesla representatives are not allowed to sell in certain states so customers who are not salespeople can refer their friends there."
Additionally, Musk said, the experiment's success could also mean that the company applies the same discounts on used Model S sales, but he emphasized that the primary objective is to determine how many stores the company needs to open.
"I do want to be clear we don't have any plans to close down stores and we'll still keep opening stores. It's just about how many future stores we'll open," he said.
As for advertising down the road, Musk says it's a possibility, "but we also need to have a mass market car in order to do mass media advertising. When we do the advertising years down the road, we want to make sure it's entertaining and interesting and has some artistic elements. If you're a reader and you see the ad, you shouldn't regret your time."
Here's the email Elon Musk is sending to customers:
Johana Bhuiyan is a tech reporter for BuzzFeed News and is based in New York. Bhuiyan reports on the sharing economy with a focus on ridesharing companies.
Contact Johana Bhuiyan at email@example.com.
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