LA Times: Tesla Cut Off Referral Program Because It Needs the Cash

SUN VALLEY, ID - JULY 07: Elon Musk, CEO and CTO of SpaceX, CEO and product architect of Tesla Motors, and chairman of SolarCity, attends the Allen & Company Sun Valley Conference on July 7, 2015 in Sun Valley, Idaho. Many of the world's wealthiest and most powerful business people …
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The LA Times published an article recently which provides a more in-depth look at Tesla’s recent decision to end their referral rewards program.

Breitbart News reported earlier this week that Elon Musk announced via Twitter that Tesla’s referral program will end on February 1, urging customers to refer friends to buy a Tesla and give them six months of free Supercharging before the deadline. Now, the LA Times has published an article which provides a more in-depth look at Tesla’s decision to end this program and how it worked.

Musk previously stated that the program was being ended in order for Tesla to save money, the Times discussed this in their article stating:

In the program’s latest iteration, a Tesla owner sends a referral code to a potential buyer. When the car is sold, the buyer gets six months of free charging at Tesla-branded stations, while the owner earns a prize. Earlier programs offered free charging for life to original car owners; Tesla will honor existing arrangements.

Tesla turned positive on its cash flow in the third quarter of 2018. Its cash on hand seems enough to pay current bills but doesn’t come close to the billions of dollars needed to pay for Musk’s future projects, from an electric semitruck to a crossover vehicle to a new factory in China. At the end of the third quarter, Tesla reported about $3 billion in cash on hand.

New issues of stock or bonds could provide the billions needed for growth, but for reasons he has not made clear, Musk said he does not need to tap the capital markets.

It’s unclear how much money the end of the referral program will save. Tesla doesn’t break out the costs in its financial statements. But for a heavy user, it could total several hundred dollars — potentially adding up to tens of millions of dollars that Tesla could spend on other things.

One of the issues holding Tesla back has been their commitment to constructing Supercharger stations throughout the country, according to the Times:

“They’re kind of doomed by their own success” by achieving higher-volume Model 3 output, because construction of service centers and Supercharger stations are “not able to keep up,” said Mike Ramsey, auto industry analyst at Gartner.

The company promised 18,000 chargers at its U.S. stations by the end of 2018. The total reached only 11,400 by October, when Musk promised to double the capacity in 2019. Currently, Tesla has 1,422 stations with 12,011 chargers.

The referral program was controversial. In late 2018, as Tesla rallied to reach sales goals, Musk warned several times that the program was about to end on a certain date, only to have it extended. Meantime, Tesla owners who had shared referral codes complained on social media that they weren’t being credited for sales. Others said prizes they earned never arrived.

But some Tesla owners that successfully took advantage of the referral program are facing issues now that the program is being suddenly shut down:

Jeff Eberhard, an engineer at VMware in Austin, said Thursday he’s made referrals that resulted in sales of four Tesla vehicles, the last one in March 2018. While he did receive a home charger autographed by Musk, he’s still waiting for the Powerwall home battery storage unit he was promised — worth at least $8,000.

He’s not so much upset about the item itself, Eberhard said — “I don’t really need it” — but the company’s lack of communication. “I’d just like an understanding of what the time line is” for getting it, he said.

Eberhard said he hasn’t contacted Tesla about the problem: “As far as I know, there’s no way to do that.”

A Tesla spokesman said Powerwalls are being built and sent to referral prize winners on a “rolling basis” and will be shipped to everyone who qualifies within the next 12 months.

Read the full article in the LA Times here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan_ or email him at


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