Tesla, having recently committed to abstaining from price wars, has promptly rolled out a fresh benefit for its customers.
On Friday, Tesla launched a new worldwide program offering extra rewards to buyers who purchase through a referral from an existing customer.
The plan has been launched across Tesla's largest markets, which include the United States, mainland China, Hong Kong, Germany, France, Canada, Mexico, and Singapore. In the U.S., starting July 6, consumers purchasing a new Model 3 or Model Y using a referral link can enjoy a $500 discount.
Tesla's website states:
From July 6, 2023, if your friend orders a new Model 3 or Model Y using your referral link:
- They will receive a $500 purchase discount as well as 3 months of full self-driving (EAP) functionality;
- You will receive 10,000 referral points.
Tesla announced that new Model Y or Model 3 buyers in China who provide a referral from an existing owner will be offered a cash rebate of 3,500 yuan, in addition to a 90-day free trial of the EAP. Referrers can enjoy a reward of 7,000 points, redeemable for Supercharging allowance, a kids' walker car, and more.
The question arises: does Tesla's "referral reward upgrade" represent an extension of the price war?
On July 6, at the 2023 China Auto Forum, 16 automakers, including Tesla, BYD, Great Wall, and SAIC, signed a "Fair Market Order Maintenance Pledge," vowing not to disrupt the market's fair competition with abnormal pricing.
Does the upgraded referral reward on July 7 imply that Tesla has violated the requirements of the pledge?
Lu Dingliang, a partner at Beijing's Capital Lawyers, stated to the Securities Times that offering consumers cash rewards, free trials, and points rewards through an upgraded referral reward scheme could be considered price subsidies. However, subsidies and discounts within a normal range do not constitute "abnormal pricing that disrupts the fair competition order of the market."
Analysts point out that Tesla has historically focused on promoting sales through direct price cuts, while traditional automakers tend to lower car prices via employee and loyalty discounts. In other words, this type of promotional strategy is quite common among traditional car companies.
The referral reward upgrade on July 7 indicates a new strategy in Tesla's promotional activities: prioritizing customer retention over attracting new customers.
Independent international strategy researcher Chen Jia told Securities Times reporters that Tesla's updated referral policy does have a certain degree of stealthy price war promotional effect, as a 3,500 yuan cashback offer is a form of price subsidy. However, this is not a direct price war, and it's not as crude as a simple cash subsidy. The strategy also includes consumer rights maintenance and a balance of new and old customers, showcasing the emphasis on enhancing customer loyalty.
