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Elon Musk says Tesla is ending its customer referral program as it's costing too much

Key Points
  • Musk said Tesla would ditch the customer referral scheme as it's "adding too much cost to the cars, especially Model 3."
  • Late last month, Tesla cut prices on the Model 3 in China, while this week it discontinued the lowest-priced versions of the Model S and Model X.
  • The company is trying to up its presence in China, and Musk recently broke ground on a new Gigafactory which is being opened in Shanghai.
Juicing up the P100D on a trip to Detroit
Mack Hogan | CNBC

Tesla's customer referral program will come to an end on Feb. 1, chief executive Elon Musk said in a tweet Thursday.

The initiative lets drivers give their friends a referral code to get six months of free charging via Tesla's Supercharger network.

Musk said the move was aimed at reducing costs incurred by the scheme. "It's adding too much cost to the cars, especially Model 3," he said.

The premium electric auto manufacturer has made a number of cost-cutting moves of late, as it looks to boost margins and expand profitability. Late last month, the firm cut prices on its Model 3 car in China, while this week it discontinued the lowest-priced versions of the Model S sedan and Model X SUV.

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In its last quarterly report, the company scored its first profit in two years, posting net profit of $311.5 million and $881 million in free cash flow.

The firm managed to pump out 86,500 vehicles in the fourth quarter, up from 80,142 in the previous quarter, but disappointed investor expectations when it came to deliveries.

The company is also trying to up its presence in China, and Musk recently broke ground on a new Gigafactory — the name given to the facilities where lithium-ion batteries and Tesla vehicles are produced — which is being opened in Shanghai. The factory, dubbed the Gigafactory 3, is slated to begin partial production in the second half of this year.

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That move comes not only as a spate of domestic rivals — including Nio and Xpeng — look to challenge Tesla's dominance in the electric vehicle space, but also as the U.S. and China try to resolve their differences over trade.

A trade battle between the two superpowers has seen billions of dollars' worth of each other's imported goods targeted with new tariffs, and both nations are trying to reach a trade agreement during a 90-day truce.