Tesla Motors Inc.: We Will Revolutionize the Customer Experience

Buried in Tesla's third-quarter letter to shareholders was a largely overlooked comment about its plan for vehicle servicing.

Feb 16, 2014 at 8:31AM

Tesla (NASDAQ:TSLA) has already implemented a number of strategic moves to disrupt the typical auto customer service experience. The moves have prompted enormous enthusiasm from customers. In one customer video an owner who has had the car for one year said she feels a connection with the manufacturer -- something she couldn't say about the service she experienced with the makers of her previous cars. She's not the only one excited about the ownership experience. Ninety-nine percent of the 600 Model S owners surveyed by Consumer Reports said they would buy a Model S again -- the highest percentage of any car surveyed in years. But based on a largely overlooked comment in Tesla's third-quarter letter to shareholders, Tesla is about to improve the experience even further.

Model S Red Twitter

Model S. Source: Tesla's official Twitter feed.

A new approach to vehicle servicing?
Buried in Tesla's third-quarter letter to shareholders was a very intriguing comment:

Tesla is pioneering a new approach to vehicle servicing that we believe will revolutionize the customer experience. An announcement about this will be forthcoming shortly.

The company has confirmed with The Motley Fool that Tesla has not made this announcement yet. What could Tesla's plan be? That's tough to say -- especially considering some of the unique service the company already provides.

The Tesla experience 
"Think of Model S as an app on four wheels," Tesla says on its website. "Software updates keep your model S current with the latest features developed by Tesla." Thanks to the company's over-the-air updates (a feature Tesla was the first to implement), the car can literally improve without going to a service center. "Our goal is not to just fix things, but to make your car better than it was," Tesla boasts. That's a claim very few car manufacturers can make.

Over-the-air updates arguably already have prevented a potential recall. In one update Tesla gave the Model S air suspension greater ground clearance at highway speeds after a vehicle drove over debris on the highway that lead to a battery fire.

The company also says it is putting in place a valet service, which means that a customer's car can be seamlessly picked up and replaced with a loaner vehicle and then returned as soon as repairs are made. This valet service comes with any service plan. For $100 (or free if owners purchase a higher-end-service plan), Tesla owners can also schedule a Tesla Ranger visit in which a technician will come to the owner to perform most maintenance and warranty repairs.

Of course the major drawback for customers is the limited number of service centers. While the company says that nine out of 10 Tesla owners in North America live within 100 miles of a Tesla service center, that statistic will need some improvement to make customers feel comfortable. But Tesla seems to be addressing this issue rapidly, increasing the number service centers across the globe by 20% sequentially in Q3.

Disruption is a prerequisite for this $25 billion start-up
Investors shouldn't get too excited about Tesla's potential big news for auto service. Given the company's very forward-looking valuation at $200 per share, Tesla is going to need to prove it's an all-star on a continual basis.

Editor's note: A previous version of this article incorrectly stated the results of Consumer Report's survey of Tesla Model S owners. The author and The Motley Fool regret the error.

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Daniel Sparks owns shares of Tesla Motors. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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