Big thanks to Surfshark for sponsoring today’s
video. Tesla has been riding a huge wave of
success recently. Their stock is soaring,
they achieved their fourth straight quarter
of profitability for the first time ever,
they released the Model Y ahead of schedule,
and they are building a Cybertruck factory
in Texas. But they have a bit of an interesting
$20 million problem lingering over their heads.
Or is it actually their secret advantage?
Let’s talk about it.
Nearly three years ago in 2017 Tesla announced
their next generation fully electric supercar.
The 2020 Roadster will be the quickest car
in the world - hold on, wait, I said 2020
didn’t I? Well, we are entering the last
quarter of 2020 and still no Roadster. This
is not new information by any means. Here’s
what Elon told Joe Rogan earlier this year.
But by far the question I get asked the most
by friends and family is: Andy, when are you
getting your Roadsters? And it seems like
my answer is that my Roadsters are always
perpetually two years away no matter what
year it is. So first of all, you may be wondering:
how am I getting multiple Roadsters (plural)?
Well, that brings us into Tesla’s conundrum.
See, Tesla has something that really no other
car company has: an internal referral program
that provides every Tesla owner with their
own unique referral link to share with others,
and if someone orders a Tesla using a referral
link, both people get 1,000 free Supercharging
miles. Cool, right? But the referrer gets
an additional perk which is a chance to win
a brand new Tesla vehicle. If you didn’t
know, I’ve been Tesla’s top referrer since
2018, and through the referral program I have
won two upcoming Tesla Roadsters, and the
crazy thing is I’m not the only one getting
free Roadsters. In fact, Tesla is supposedly
giving away over 80 free Roadsters through
the referral program. But these aren’t just
the plain old base Roadsters - no - these
are Founders Series Roadsters that cost $250,000
each, and Tesla said they’re only producing
1,000 of these founders series roadsters.
This comes to a total of $20,000,000 worth
of vehicles that Tesla is giving away soon.
But more interesting is it may be even more
than $20,000,000. To see if this is a curse
or a genius strategy, let’s take a look
at how we got here.
Tesla first launched the referral program
in 2015, and since then it has gone through
several different iterations. Back in 2018
when I got my Model 3 the program was in Phase
9 and in that phase Tesla was offering some
awesome prizes for referrals such as a kid
size Model S, priority access to software
updates, unique performance wheels, and an
invite to a future Tesla event - all of which
I received. But Tesla also did something pretty
unheard of during phase 9 - they announced
“Secret Levels” which could be unlocked
after getting 5 referrals. These secret levels
offered some even more incredible prizes such
as experiences like attending a SpaceX rocket
launch which I was lucky enough to do last
year. But even as amazing as that was, the
most exciting secret level prize was the ability
to win discounts on an upcoming Founders Series
Roadster. 10 referrals unlocked a 10% discount
with the ability to get a 100% discount after
hitting 55 referrals. But it gets even crazier.
I emailed the Tesla referral program in November
2018 when I hit 55 referrals and in their
response they said: "If you earn more than
55 you begin working towards your second Roadster
in the same fashion.”
So Tesla was not only giving away discounts
for one Roadster but two Roadsters which is
a $500,000 value per person. In December 2018
I became the top referrer and not too long
after that, the head of the referral program
left Tesla, and around that same time Elon
announced that they were officially ending
the referral program as a cost cutting measure.
Here’s where it gets interesting. When phase
9 of the program “ended” on Feb 2nd 2019
there were roughly 80 Roadsters claimed to
be won for free. However, those 80 do not
include the dozens of people who likely won
a 90% or more discount off a Roadster. Or
what about the dozens or more people who won
anywhere from 50-85% discounts? How many of
those people will buy a Founders Series Roadster?
Since Tesla is only producing 1,000 of these
how many will be sold at the full retail price
after honoring all the discounts? Seems like
the number of people buying at full price
could be relatively small.
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So are these free Roadsters that are worth
millions of dollars of unseen revenue a big
problem for Tesla? Some people think so. But
what if it’s actually their secret advantage?
If we look at this from a different perspective
we know that giving away a $250,000 Roadster
does not mean it's an actual $250,000 expense
for Tesla. Giving away a Roadster essentially
has two costs for Tesla: the actual cost of
producing the car which should hopefully be
much less than $250,000 and the opportunity
cost of giving away a car that someone else
possibly would have purchased at full price.
I also found something interesting as I was
researching for this video. The official Tesla
Referral program page states the following
about the Roadster discounts: "Discount off
the base price will be displayed in the Loot
Box. Discounts will expire one year after
the Roadster becomes available for order.”
The key phrase there is “discount off the
BASE price”. It also stated this in the
official secret level loot box page back when
it was first appearing where it said “the
ability to purchase a founders series Roadster
at a discount off the BASE price.” The word
base keeps showing up. If we visit the Tesla
Roadster page you can see it says the base
price is $200,000. So does this mean Tesla
will only offer discounts up to $200,000 off
and possibly require the winners to pay the
remaining $50,000 for the founders series?
That would at least bring in some money that
they missed out on compared to giving it away
completely for free. Or do they mean “base
price” as in the full $250,000 but not including
any add-ons like Full Self Driving, paint
color, upgrades, etc. Nobody knows, not even
me.
So by now you may think Tesla was crazy for
giving away millions of dollars worth of Roadsters
for free. But Tesla is smart. They know that
most of these free Roadsters are going into
the hands of some of the most influential
owners including Tesla focused YouTubers like
myself or Ben Sullins all the way up to huge
YouTubers like Marques Brownlee, and of course
other content creators such as bloggers and
podcasters. My buddy Ryan from Ride the Lightning
podcast and Trevor from Tesla Owners Online
are also among the few who have won two Roadsters.
Tesla also knows that some of these people
who won Roadsters may have violated the program
rules so they have the right to say “Sorry
John Doe, you posted your referral link in
your social media bio so you’re disqualified”.
So I’m assuming not all of these 80 Roadsters
will actually be given away, especially due
to some of the winners also not being able
to afford the income taxes required to take
delivery of such an expensive car. I think
I’ll owe at least $150,000 just in taxes
alone to get both of my Roadsters.
Overall, I think the Roadster is Tesla’s
marketing ploy and it has been from the beginning.
Tesla spends $0 on traditional advertising
while other car manufacturers like General
Motors spent nearly 3 billion dollars on advertising
in the United States alone last year. Tesla
is making a bet that their 20 million dollar
Roadster giveaways will be a better investment
than billions of dollars spent on traditional
advertising. They know the Roadsters in the
hands of influential content creators will
draw a ton of attention to Tesla as a brand
and thus increase people’s interest in possibly
buying one of the “normal" Tesla vehicles.
It’s like having a restaurant with a famous
dessert. People come for the dessert, but
end up spending the most money on appetizers,
entrees, and tips. If you don’t believe
me think about why Tesla brought back the
referral program last year merely weeks after
shutting it down. They published a blog post
announcing the rebirth of the program saying:
Customer referrals have been a key part of
our growth, helping Model 3 become the best-selling
electric vehicle in the world. While our previous
Referral Program was very successful, it came
with significant costs and ending the program
last year allowed us to pass those savings
along to customers. We’ve since restructured
the program to save the company money while
also offering exclusive rewards such as a
chance to win a Founder’s Series Model Y
monthly and a Founder’s series Roadster
supercar quarterly, both signed by Elon Musk
and Franz von Holzhausen.”
And since bringing the program back, Tesla
has added Model Y to the program and increased
the incentive for solar referrals. Tesla obviously
knows something about the referral program
that we don't. They had the program for years,
then they ended it, then they brought it back
again and are still giving away free cars.
There’s someone at Tesla who has proven
to Elon, or maybe it’s Elon himself that
knows the referral program is worth it - worth
it enough to bring it back from the dead after
promising to give away millions of dollars
worth of Roadster discounts. Since the program
was brought back in 2019 there have been roughly
30,000 more referrals that have taken place
according to a website that tracks stats about
Tesla referrals. It’s especially important
in this day and age for a company to have
some sort of unique advantage. I think Tesla’s
referral program seems to be one of theirs.
Unfortunately even I, the top referrer in
the world, have no information about when
the roadsters will be delivered. I’m personally
guessing it will be sometime in 2022 because
2021 will be the year of the Cybertruck. What
do you think about the Tesla Referral program?
Do you think it’s a problem or is it a good
idea? Let me know in the comments below. If
you enjoyed this video please give it a thumbs
up and and subscribe to see more Tesla and
tech videos in the future. My name is Andy.
Thank you for watching, and I’ll talk to
you in the next one.
