Tesla adds unlimited supercharging for buyers using referral link
Tesla made several significant changes to their referral program tonight. Noticeably all changes happened after market close on Friday, perhaps to minimize impact to stock price. (see full details of new referral program here.)
1) The biggest change is the referral program is adding free unlimited supercharging to those who use referral links. Now this could pose a few problems. First, those who recently took delivery of a Model S/X without free supercharging might feel irritated/saddened. Also those who already placed orders and are awaiting their cars (w/o unlimited supercharging) now might want to cancel their orders and place new ones. I think it'd be wise for Tesla to allow all people who have existing orders but haven't taken delivery to add referral codes if they haven't already to add the unlimited supercharging. (Note: if you're one of these folks, feel free to use my referral code ("david7556") and try to get your existing order "upgraded" to unlimited supercharging. Here's my referral link, http://ts.la/david7556. Thanks in advance to those who will use the referral link/code.).
Another challenge with linking unlimited supercharging to the referral program is what happens with those people who order cars without a referral link... they get cars without unlimited supercharging and that's a big hit. It's almost unfair, in the sense that people who don't hear about the referral link/code or have a friend who tells them about it are in a way penalized for it. Sure, you can look at it the other way, people who find out about the referral link are given a reward/benefit. I think though perhaps a better reward would have been to give buyers who use the referral code $1000 discount and give them $500 in supercharging credit. That probably would be enough to incentivize people to use the referral links more, but not make those who didn't know about the referral links feel so irritated.
2) Tesla cut short its current referral program which was supposed to go until June 15th. This is somewhat of a big deal because it shows that Tesla is acknowledging the current program wasn't enough. Also, this leads to speculation that the current order run rate has dropped off significantly enough to warrant some drastic changes, like these changes to the referral program in order to stir orders/demand. This possible drop in orders can be a cause for concern for TSLA investors. Perhaps it could be the Osborne effect from a pending Model 3 release. In other words, people are viewing the Model 3 as "new" technology and are drawn to that, but the Model S/X are being seen as "old" tech or previous generation tech... regardless of whether that's true or not (btw, it's not true), it's the perception that matters. And as excitement builds for the Model 3, people might be taking the "wait and see" approach as to whether or not to buy a Model 3 or Model S/X.
In order to combat this, Tesla has a few options. One, they can just accept it and let orders fall. But this has a negative impact on their revenues, gross profits and earnings. So they likely would like to avoid this outcome. Second, they can try to stir demand in others ways. Updating the referral program is one way. Giving free unlimited supercharging is another way. Perhaps probably the biggest demand driver would be to release an updated Model S look and/or features (ie., battery pack with 2170 batteries and faster charge rate, or HUD). However, those new features probably aren't ready since most of the company's focus is on getting the Model 3 out in time. So, Tesla's hands might be somewhat tied, and it's entirely possible that the updated referral program and the unlimited supercharging are some of the best ideas they can implement at the moment. It's also possible they have some other demand levers (like bringing back the 2 year lease) available and they might release those if needed.
If Tesla is unable to overcome this possible lowered order run rate for the S/X, then it could lead to negative impact with their financial results in Q2, Q3 and even Q4. While Model 3 ramps, Tesla is still largely dependent on the revenue that the S/X brings in. So, if orders fall then that's going to be a big hit to Tesla's revenue and gross profits.
Another way to look at it is if the drop in orders is only minimal, then it won't have a big impact... for example if Tesla can still deliver 22-23k Model S/X per quarter, then there will be an impact to their earnings but it won't be as substantial as if they could only deliver 20k Model S/X per quarter.
I'm optimistic that this new referral program with the extra bonus of free unlimited supercharging will be enough to help rebound order rates for Q2 (which ends in several weeks). Q3 might be challenging though as there will be lots of hype over the Model 3 release and Model S/X buyers (at least some) might be wanting to wait to see what the Model 3 is like before pulling a trigger on a much more expensive Model S/X.
3) Tesla updated their mobile app today as well. The mobile app now shows an icon at the top right corner (like a treasure chest icon) that links to show you the status of how many referrals have come in with your referral link. This is something that was taken out when they updated their app previously but now has been added back in. And it's another gentle encouragement by Tesla for owners to take advantage of the referral program.
And as a final tip, if you've recently placed an order for a new Model S/X without using a referral link/code but haven't taken delivery yet, then my suggestion would be to contact your delivery specialist ASAP and tell him that you want to add a referral code (ie., you can give them my referral code, "david7556") to your order. And if they won't do it, keep on trying... ask to talk to a manager and insist on getting a referral code added to your order for the free unlimited supercharging. For those ordering a new Model S/X, my referral link is http://ts.la/david7556.
Update: It appears that some owners who have taken delivery of a new S/X are showing that they have free unlimited supercharging on their MyTesla page. Tesla might be giving free unlimited supercharging to those recent buyers who used referral links. To view the most recent discussion on this, visit this TMC page where this post is being discussed.