Tesla Motors Inc. (TSLA) is an electric automobile and battery manufacturer. Tesla is currently enjoying their competitive advantage on the electric vehicle (EV) market with their superior automobiles that recently blew the scale for an automobile evaluation with 103 out of 100 possible points. The Consumer Reports says "It's a remarkable car that paves a new, unorthodox course, and it's a powerful statement of American startup ingenuity". However, a week later Tesla is struggling with poor reliability reviews. What is going on?
The recent negative feedback from the Tesla S owners made the price of Tesla shares drop 6.67% this week. (11.3% alone on Tuesday, but picked up again through the week). The biggest problems were related to the charging equipment, the drivetrain, and the center console. In Norway, a group of twenty people are about to file a lawsuit against Tesla because their P85D's do not produce the 700HP Tesla promised. It is ironic how the Tesla Model P85D got the highest score ever for an automobile, and the week after is being accused for sub-par reliability. It is important to keep in mind that in a recent study, 97% of Tesla owners said that they would definitely buy their car again.
A few weeks ago Tesla Model S P85D earned the highest score for an automobile through Consumer Reports. Consumer Reports is a nonprofit organization that was formed in 1936. It serves consumers through unbiased reports and tests of consumer products, such as automobiles. The $104k Tesla received 103 out of 100 points on the test earlier in October. It receives excellent reviews all over the different tests such as performance, safety, comfort, and is described as the most capable EV on the market. Charging is free at Tesla Supercharger Stations, catapult acceleration, optional third row etc. The problem is that it scores 43% under average on reliability, and they can therefore not recommend a purchase.
Screenshot from Consumer Reports
In the Consumer Reports Tesla's Reliability Doesn't Match It's High Performance they received 1,400 survey responses from Model S owners "who chronicled an array of detailed and complicated maladies". The most common complaints are squeaks and rattles. The brake rotors tend to warp, and the door handles often fail to "present" themselves. Inoperable wipers, leaking battery cooling pumps, out-of-alignment trunk and hatchback latches, and persistent wheel-alignment issues are also complaints that are repetitive. Tesla has also replaces a lot of the costly engines, but it goes without saying that Tesla owners don't want to replace the engines out of pocket when the warranty doesn't cover them anymore. The issues have given Tesla a worse-than-average overall problem rate, which is down from average last year. This does also mean that the Model S does not receive Consumer Reports' recommended designation. Elon Musk was quick to announce that the report was based on a lot of early production cars, and the problems have been fixed in the newer models. Musk also addressed that the report shows that 97% would purchase a Tesla again, and that Tesla received a top ranking in service.
The two reviews are like night and day and it is hard for a potential Tesla customer to determine what report weights the most. For what is the best automobile worth when it can't be driven? It is also going to be very interesting to see if people will have to replace the costly engines themselves, if they are in need of replacement, after the warranty has expired. As Mark Rechtin, a highly regarded automobile expert, says it: "It's one thing to have a quirky, problematic car that sells 20,000 units per year to wealthy people who probably own at least one backup vehicle. It's quite another when Tesla scales up to its 2020 projection of 200,000 U.S. Model 3 buyers, who may not have the luxury of being so forgiving. "