Elon Musk’s iconic electric vehicle company spurs breathless media coverage either glorifying or slamming his cars, rather than taking a measured approach towards evaluating the company as one with normal strengths and weaknesses.
When it comes to Tesla, there’s really no middle ground—the company seems incapable of eliciting ambivalence. Instead, Elon Musk’s iconic electric vehicle company spurs breathless media coverage either glorifying or slamming his cars, rather than taking a measured approach towards evaluating the company as one with normal strengths and weaknesses. This is perfectly encapsulated in two recent media flip-flops, which reflect the company’s non-stop media roller coaster. First, there’s Bob Lutz, the legendary “Car Czar” who was former vice chairman of General Motors and one of the architects of the Chevrolet Volt, whose column last week in Road and Track stated that Tesla is showing the automaker “trifecta of doom.” Meanwhile, Consumer Reports has recently published that it does not “recommend” the Model S in its reliability survey, in spite of the cars’ outstanding performance.
This is quite the reversal for both. Lutz is a longtime EV advocate—in addition to spearheading the Volt, he’s a former Marine with strong views on the importance of using electric cars to end U.S. oil dependence, who has not minced words when arguing for Tesla’s promise in the past.
But the turnaround from Consumer Reports is even more dramatic. In August, the Tesla Model S P85D score was literally “off the charts,” exceeding the Consumer Reports scale for excellence, scoring 103 out of 100. But this month, Consumer Reports conducted an auto reliability survey of 1,400 Model S owners and found that it could no longer recommend the same vehicle it had so recently hailed as the “best-performing car we’ve ever tested.”
“Model S owners… chronicled an array of detailed and complicated maladies. From that data, we forecast that owning that Tesla is likely to involve a worse-than-average overall problem rate,” Mark Rechtin of Consumer Reports writes. “[This] means the Model S does not receive Consumer Reports’ recommended designation.
The media response was swift and superlative: “Could the wheels be about to come off at Tesla?” wrote the Telegraph, “Tesla risks losing status as ‘cult stock’ amid reliability concerns” wrote the Wall Street Journal, “Tesla Stumbles…in Reliability Survey” wrote NBC News.
Tesla CEO Elon Musk took to Twitter to defend his company: “Consumer Reports reliability survey includes a lot of early production cars. [Issues] already addressed in new cars.” When referencing the data compiled by Consumer Reports, however, the 2015 model was, in fact, ranked the worst with a “poor” rating. Musk then referenced another part of the Consumer Reports survey that found that 97-percent of owners expected that their next car would also be a Tesla. Musk called this loyalty the “acid test” for how customers actually feel about his company’s product.
So does Tesla have a serious reliability problem on its hands or not?
“[The Consumer Reports reliability survey] has certainly taken a lot of luster off the positive stuff… I think this brings Tesla back to Earth where some of the euphoria for the product—most of which is justified—has room for improvement,” Tony Posawatz tells The Fuse. He’s the former CEO of Fisker Automotive and was the Vehicle Line Director for the Chevrolet Volt at General Motors. “It shouldn’t surprise people. This is Tesla’s first car versus venerable brands that have been producing cars for years and even decades. The real challenge will be if they can manage multiple vehicles and have a variety of offerings for customers—and make them all great.”
Levi Tillemann, author of The Great Race: The Global Quest for the Car of the Future echoes this sentiment that Tesla is still a new company gaining ground.
“You need to see Tesla for what it is: It’s a new company that’s still finding its feet in terms of its market and in terms of its manufacturing process,” Tillemann says. “We should not be surprised at all when they run into rough spots. Quite frankly, I’m surprised they haven’t run into more rough spots.”
Consumer Reports confuses with different metrics
Perhaps more disconcerting than Tesla’s reliability issue is its hyperbolic relationship with the media. The company seems to court extreme responses—both positive and negative. In the case of the coverage following the Consumer Reports news, the headlines belied the fact that the August record-breaking performance ranking for the car was computed from a completely different metric than the reliability survey.
In the case of Consumer Reports news, the headlines belied the fact that the August record-breaking performance ranking for the car was computed from a completely different metric than the reliability survey.
“This car performs incredibly well. Others have tested it and come to the same conclusion. But we regret if anyone read the test and assumed the car was reliable as well. That was never our intention,” Jake Fisher, Director of Auto Testing for Consumer Reports tells The Fuse. To wit, the August test was conducted on a single Tesla P85D on the Consumer Reports test track in Connecticut. The reliability survey compiled 1,400 owner responses—information from people who lived with and drove the cars every day.
“I have seen people misrepresent us a bit and perhaps try to turn this into a reversal or say we changed our minds,” Fisher says. “That couldn’t be further from the truth. They’re different metrics. That’s why they didn’t correspond.”
No middle ground
Getting clear and dispassionate coverage of Tesla is a problem, experts say.
“I don’t like the way the industry and stock analysts tend to cover Tesla—all superlatives all the time,” Tillemann says. “Part of the problem is that Tesla is an extreme company. From the beginning, they were conceived to do extreme things, things that had never been done. They have frequently performed in an extreme fashion, delivering products that were really beyond the imagination of the industry even just a few years ago.”
While the products may defy expectations for performance, the ride has been bumpy for Tesla investors. But for the EV industry as a whole, the visibility that Tesla’s extreme actions spur may in fact be a benefit.
“The attention that [Musk] and Tesla bring is good and healthy for the market,” Posawatz says. “The regular OEMs are moving cautiously into this space and it’s nice to have some attention drawn to it because when customers do get exposed to [EVs], they love the experience.”
Part of Musk’s bold strategy for Tesla seems to court extreme responses from the media intentionally. Instead of describing what was essentially a new air filtration system for his Model X, Musk announced a new “bioweapon defense mode” for the car. When upgrading the Model S’ acceleration capabilities, Musk named the new feature that can go from 0 to 60 miles per hour in 2.8 seconds “Ludicrous Speed”—a reference to the cult classic comedy Spaceballs. Most recently, when launching some autonomous features that already exist in several other luxury car models, Musk touted the Model S’ new “autopilot” capabilities.
Tillemann says the way that Tesla launched its autonomous function was an example of Musk’s “live by the sword, die by the sword” way of doing business.
“No other car maker would characterize the functionality on that model the way that Tesla did,” he says. “But Tesla has really embraced the monikers of ‘game changer’ and ‘technology leader’ in the industry. So they really get out there and call it an ‘autonomous vehicle’ and launch this technology that’s still kind of a work in progress. Other automakers would be hesitant to do that—and it adds a lot of risk.”
But media and investor responses to Tesla’s moves are typically accompanied by a short attention span. Tillemann notes the “brick battery” debacle that dogged the company back in 2012. Owners found that running their battery to full discharge left the vehicle utterly paralyzed—unable to even be pushed—and in need of a full—and pricey—battery replacement. Slammed as a “devastating” design defect, it was unclear if the company could ever recover.
“That was a big problem but they bounced back and nobody remembers it today,” Tillemann says, also crediting Tesla’s aggressive response to resolving the issue as another reason its severity has been somewhat forgotten. “It’s funny because it’s demonstrative of the kinds of big problems that technology companies face when they do bold things.”
Tesla’s true tests lie ahead
On the road ahead for Tesla, the experts agree that the make-or-break factor for the company will not be its bold pronouncements or its willingness to take risks: It will be its ability to deliver reliable performance on a mass-market product.
“The Model S sells about as many cars per year as the Corvette. The question is, how big is the market for vehicles that are selling at the price point of the Model X and the Model S?”
“The Model S sells about as many cars per year as the Corvette,” Posawatz says by way of comparison. “The question is, how big is the market for vehicles that are selling at the price point of the Model X and the Model S? You’re going to run out of these people when they’re also getting choices from other OEMs in the not-too-distant future… Tesla has a lot of work to do to get to the mainstream with a car positioned in the $30,000 to $40,000 range.”
Posawatz also notes that Tesla’s core market to date has been technology lovers and early adopters as opposed to traditional environmentalists seeking to cut back on their fuel consumption.
However, the tech-savvy who wish to purchase a Tesla at its current price point may not ultimately be reflective of the type of buyer the automaker will need to court in the future.
“These early adopters tend to give Tesla a lot of slack because they’re excited about the performance, the technology and the company,” echoes Tillemann. “But they have to get these issues under control before they launch the [$35,000 Tesla] Model 3. When you’re aimed towards a lower end, more utility-oriented audience, it’s going to be a deal-breaker to have these kinds of reliability issues.”