Tesla Displaces Mercedes-Benz in Consumer Brand Survey

Tesla Motors' (NASDAQ: TSLA  ) Model S amassed an impressive number of awards in 2013, the car's first full year of production. Accolades included Motor Trend Car of the Year (by unanimous vote) and a five-star safety rating across all categories tested by the National Highway Traffic Safety Association, among others. A year of mostly positive press, combined with a stock that soared about 350%, has had a meaningful impact on consumers, apparently. The brand soared from 11 in last year's Consumer Reports brand perception survey to fifth this year.

Model S. Photo by Levi Sim, used with permission.

Putting out fires
Three high-speed accidents in a two-month period last year that caused Model S battery fires showed how sensitive Tesla's stock price was to any threat to its public perception. The stock fell from levels around $190 to the $130s after the third fire and an NHTSA investigation was initiated.

Notably, despite rising Model S sales and millions more miles driven since the third fire, no additional reports of Tesla battery fires have surfaced. The affect on the negative sentiment toward Tesla stock has appeared to be positive; negative headlines have largely dissipated, and the stock has recovered to levels close to its all-time high. Likewise, the recovery of the stock price in the absence of more fires is also evidence that public perception is an important factor for Tesla.

That said, given Tesla's bullish valuation with the stock trading at about 12 times sales, any negative press could easily spark a sell-off. Whether the reported fires followed by the subsequent lack of news caused the stock's respective sell-off and recovery or not, it is difficult to dispute the argument that the public perception of Tesla's brand is imperative to the its success -- especially considering it currently derives 100% of its automotive revenue from sales of just one model.

Given the importance of Tesla's brand for the electric car-maker in these early stages of its history, Consumer Reports' rank of the brand at number five is great news for investors. The ranking was derived from a survey of 1,578 vehicle owners who were asked to rank brands on quality, safety, value, design and technology. Tesla's score in the study nearly doubled from last year, rising from just 47 to 88. Consumers ranked Toyota, Ford, Honda, and General Motors' Chevrolet ahead of Tesla in the study. To take fifth, Tesla displaced Mercedes-Benz, falling from fifth last year to seventh this year.

Investors should keep in mind that Consumer Reports' auto brand perception poll measures consumer mindshare among auto brands and is not a measure of owner customer satisfaction. When it comes to customer satisfaction, owners of the Model S gave the vehicle 99 out of 100 possible points in a Consumer Reports survey. Further, Consumer Reports' own review of the car earned the Model S 99 out of 100 possible points.

Can production keep up?
While it's great for investors that Tesla's brand is doing so well among consumers, production is the factor that has the potential to make or break the story driving Tesla's stock right now. As a supply limited company, there is no shortage of demand for its vehicles; despite zero advertising spending, Tesla sales every car it makes. Investors should keep a close eye on Telsa's guidance for deliveries in 2014 when it reports fourth-quarter earnings to see how well it will be able to ramp up production to take advantage pent-up demand.

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Read/Post Comments (14) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On February 09, 2014, at 7:44 AM, thegreentreefrog wrote:

    No one Asked George Clooney how he liked his Tesla? "I'm on the #&cking side of the road again!"

    The TESLA S @ 4,741 Lbs, THE ELECTRIC PIG!

    Who would spend $75,000 on a cat that could not win a race from NY to Pittsburgh,against a 1971 Chevy Vega?

  • Report this Comment On February 09, 2014, at 8:27 AM, weaponz wrote:

    @thegreentreefrog - George Clooney never had a Tesla Model S. He has one of the early Roadsters which he bought at one of his off houses that he rarely visited. The issues that Clooney had was with another electric car, his roadster only broke down once. Even after it was fixed, he never used it again.

    And the weight of a Tesla Model is 4,647lb. Which is lighter than other full sized sedans like the Mercedes S class.

    And racing on public roads is illegal. But the Tesla would probably win.

  • Report this Comment On February 09, 2014, at 9:01 AM, jasmith909 wrote:

    @weaponz

    A Tesla would beat a Mercedes in a street race? You've got to be kidding, right? Mercedes makes some of the most powerful cars in production today, and with Tesla you're paying about $90k-$100k for 416 horses (performance model). And that same $90k - $100k will get you about 550 - 577 horses with Mercedes. Granted, you'll definitely spend more on gas in the Merc, but without question, you'll be able to dust Teslas all day long, left and right.

  • Report this Comment On February 09, 2014, at 9:46 AM, duuude1 wrote:

    Hey jasmith909,

    Reality says otherwise:

    Model S vs 2012 Mercedes-Benz E63 BiTurbo

    https://www.youtube.com/watch?v=xYwSiLTcF0Q

    Model S vs Dodge Viper SRT10

    https://www.youtube.com/watch?v=VLCdP6sMN9k

    But Model S loses to Supercharged Chevrolet Camaro SS

    https://www.youtube.com/watch?v=OAGEDxgL1hk

    I think you folks need to stop yapping and just get in a Tesla and give it a test drive. Or just organize a Fool Drag - Fools in drag... racing Teslas against all comers, and post the videos here... greentreefrog can bring his 1971 Chevy Vega and jasmith can bring his ooohh 550 hp Mercedes and we'll see who drives best in heels and a wig. :)

    Duuude1

  • Report this Comment On February 09, 2014, at 10:23 AM, Jengis wrote:

    Well said ... Duuude1

  • Report this Comment On February 09, 2014, at 11:19 AM, JackB125 wrote:

    The Model S does very well in these races because its electric motor generates 100% torque right off the line. If the Model S 2.0 has AWD, as many expect it will, engineers are estimating that the 0-60 mph time of 4.2 seconds will drop to 3.2 seconds.

  • Report this Comment On February 09, 2014, at 11:32 AM, BillMarshall995 wrote:

    The Tesla is not an engineering marvel. It is an electric car filling a niche market . Anyone can build one as there are very few things on it that are patent protected. The thing uses a Mercedes shifter out of its M Class SUV. The other car makers will come up with their own version and they will each steal about 5% of the market which will collectively cut Teslas market in half. AND if one of these other companies who can all afford to lose money on their electric vehicles can come up with a better mouse trap Tesla is screwed.

    And all of this depends on whether another Tesla burns up. The entire bottom of the car is a sheet cake of batteries protected by a panel of steel the thickness of a stop sign. When it runs over anything and dents the batteries they will short out and cause a fire .perhaps hours later when the family is asleep and the whole house burns down.

    This stock is a gamble . Once this company has to kick in another two grand in costs for advertising, fight law suits for its monopoly on sales,service and parts. Hast to set up repair centers as they age it will find out what a honeymoon it has enjoyed.

    I cannot believe the analysts never mention these factors when they discuss this stock. They are all real ant relevant no matter how fast this car is.

  • Report this Comment On February 09, 2014, at 3:08 PM, GaryDMN wrote:

    Most people in the USA have never even seen a Tesla.Where was this Brand Survey taken, Beverly Hills?

  • Report this Comment On February 09, 2014, at 3:17 PM, clutch58 wrote:

    You know how the Vega wins the race? By both drivers sticking to the speed limit. While you're charging your EZ-Go, the Vega is still rolling up the miles.

  • Report this Comment On February 09, 2014, at 3:17 PM, tigerade wrote:

    Lol, obvious Tesla shorts are obvious.

    I have driven the car. It IS an engineering marvel. And no, I don't own the stock. Amazing car, amazing company, pricey stock. I have high hopes for the future. The shorts will get burned as always.

  • Report this Comment On February 09, 2014, at 3:20 PM, CAGriffinX2 wrote:

    @BillMarshall995, The Tesla Model S "IS" a "engineering marvel" which has received a longer list of accolades than any other car. All you are doing is spreading FUD because you lost your a$$ shorting TSLA stock! You know nothing about Tesla "the company", its current model, and it's future plans.

    This is not just a car filling a "niche market". It competes with other full-sized "luxury cars" like the BMW 5 & 7 Series, Mercedes E & S Class, Lexus LS, etc. but it just happens to be an electric car. The Tesla Model X SUV/Crossover will debut later this year, with full production in early 2015. The $35,000 (base price) slightly smaller Model E and Model Y SUV/Crossover will be coming in late 2016 and early 2017.

    Tesla has thousands of patents, but on unimportant things like a "shifter", they saved money in development costs by borrowing items from Mercedes. Daimler (parent company of Mercedes) owns some of Tesla's stock, and will soon have an electric Mercedes that uses the Tesla drive train. Toyota also owns stock in Tesla, and has a Tesla drive train in its electric version of the RAV4.

    You are also LYING about the protective ARMOR plate under the battery pack. It is much thicker than a "stop sign" at 1/4-inch thick. The reason this armor plate was penetrated, was when one end of the long, thick, curved metal object got lodged under the first of 16 separate battery modules, the other end of this object found a crack in the road. This resulted in a "pole vaulting" action, and through tremendous force, punched a 3-inch-diameter hole through the armor. The car's computer immediately knew there was a problem and instructed the driver to safely pull over and exit the vehicle. He did not follow instructions and drove until the next exit, and stopped at the end of the ramp. He still safely got out long before the car caught fire. Had that been an ICE-powered car, with only a thin layer of sheet metal flooring protecting the cabin, he may have been the one getting impaled instead of just a battery pack!

    Unlike other car companies, Tesla does not need traditional advertising at all because of their Apple Store-like showrooms in malls around the world. This has obviously worked very well among the general public with the proof being in the title of this article.

    The drive train in electric cars is very simple with few moving parts and requires very little maintenance.

    I'm sorry you lost so much money in shorting their stock. Suck it up, be a man, and stop all the FUD about Tesla.

  • Report this Comment On February 09, 2014, at 6:43 PM, 68surfer wrote:

    @greentreefrog please come up with something more original. Your comment is getting very old and does not bode well for your credibility at all.

    @billmarshall995 if anyone can build one then why don't they? Most likely because what you are saying is pure and utter BS!! Everyone knows all other car companies can out spend Tesla, but what they cannot do is build a better electric car or they would have already. Hope this seems more obvious to you now.

  • Report this Comment On February 10, 2014, at 12:14 AM, thedawg60 wrote:

    ya know if ppl. really ever want to know about a car go ask the Tech.that works on em day in and day out.I ask about the Benz.few yrs.back.Tech.told me he loves em breaks down all the time.That is why he makes over $100,000 per yr.to fix the junk.

  • Report this Comment On February 10, 2014, at 12:47 PM, dlwatib wrote:

    "As a supply limited company, there is no shortage of demand for its vehicles; despite zero advertising spending, Tesla [sells] every car it makes." You really don't need to know any more than that. However, to add icing to the cake, Tesla is very popular in Norway due to EV subsidies and tax breaks and is now winning sales in the rest of Europe as well, and they just started expanding into China.

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