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Tesla offers $1,000 credit to Model S buyers

Tesla offers $1,000 credit to Model S buyers
A Model S sedan is parked at a Tesla charging station at a highway rest stop near Rieden, Germany. (Sean Gallup / Getty Images)

Tesla Motors Inc. says that word of mouth sells its pricey cars. Now it wants to attract more buyers with a discount.

Chief Executive Elon Musk announced Wednesday that the Palo Alto electric-car maker will give credits of $1,000 to Model S buyers who have been referred by Tesla owners. Those owners will get their own $1,000 credits in the program, set to last until the end of October.

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In an email sent to Model S owners, Musk said the $2,000 that Tesla would lose per car could lower future expenses as the company builds out a smaller retail network.

"If we can amplify word of mouth, then we don't need to open as many new stores in the future," Musk said. "So, we are going to try an experiment."

But analysts said the strategy is basically a cash-back incentive meant to boost business at a time when Tesla could be reaching its saturation point in the luxury car market.

Tesla sold 8,950 cars in the U.S. during the first six months of this year, down 1.6% from the same period a year earlier, according to research firm Autodata Corp. Tesla deliveries are falling during a year when auto industry sales have risen 4.4% and are on track to have their best showing since 2001.

"It signals that the first segment of consumers, the early adopters willing to pay a premium for an electric vehicle, may be coming to an end, or is slowing down at least," said Thilo Koslowski, vice president and automotive practice leader at Gartner Inc.

Karl Brauer, an analyst at automotive-data company Kelley Blue Book, said Tesla is going after the neighbors of rich Tesla owners, aiming to strengthen its grip on its wealthy clientele rather than reach into less-affluent markets.

But these people may not see the value in grabbing a $1,000 discount off a car that typically costs $100,000.

"Money isn't that big a deal to them," Brauer said. "All the people who really wanted a Tesla have one, and no one else is really interested in buying one."

Tesla owners who refer 10 people for discounts, the maximum allowed, could wind up with credits of up to $10,000 – which would go into a Tesla account for service charges, accessories and even the purchase of a second car. They also will have the opportunity to buy Tesla's new car, the Model X, before it goes on sale to the public.

Owners who refer five people will be invited to tour Tesla's giant battery factory in Nevada that is under construction. The referrals must result in a purchase.

daina.solomon@latimes.com

Twitter: @dainabethcita

Times staff writer Jerry Hirsch contributed to this report.

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