Despite Impressive Accolades, Tesla Motors, Inc.'s Model S Has Problems

When it comes to performance, Tesla Motors' (NASDAQ: TSLA  ) Model S has potential to be the gold standard among similarly priced luxury cars. But, as far as craftsmanship goes, the Model S appears to be lacking. The car, which had already only garnered an average reliability score from Consumer Reports, may have more issues than even its underwhelming score would suggest, according to the latest commentary from the magazine on the game-changing vehicle.

Model S. Image source: Tesla Motors.

The problems
Just 15,743 miles into Consumer Reports' ownership journey with a Tesla Model S, the respected magazine says the vehicle "has developed many minor problems that merit some reflection." The magazine calls the problems "a few quirks" and notes that some are "unique to Tesla."

Here is a list of every issue the magazine listed:

  • Retracting door handles that wouldn't present themselves (fixed with Tesla's signature over-the-air software update).
  • The touch-screen display "went blank" (fixed with a "hard reset" at a Tesla service center).
  • A "creak emanating from the passenger side roof-pillar area" that required Tesla technicians to disassemble and refit some trim panels.
  • A buckle in the rear-facing seats had broken and was replaced by a new upgraded version of the two-seat bench.
  • The front trunk lid wasn't responding to the release from the button on the touch-screen display (fixed with a new front trunk latch).
  • Tesla-supplied adapters came apart (Consumer Reports notes: "This had no safety implications, because the exposed high-voltage prongs aren't energized without a successful 'handshake' between the charger and the car").

With the motor sitting under the rear seats on the rear axle, the Model S is equipped with extra storage space where the engine in a traditional vehicle is located. Tesla refers to this front trunk as a frunk. Image source: Tesla Motors.

Importantly, Consumer Reports says that its experiences with test cars are "purely anecdotal" and are not factored into reliability ratings. "After all, it's a sample size of one," says Consumer Reports' Gabe Shenhar.

Still, the experience has been unfortunate enough that the magazine says there is little hope for an improvement in the vehicle's reliability score for 2014. In fact, Consumer Reports suggests that the score may fall below its already unimpressive average score.

Given the number of bits and pieces Tesla has replaced on our car, it might be tempting to guess that its reliability score will go down. The reality is, it might -- depending on the frequency and severity of problems reported by our subscribers and whether they show that reliability is below average.

A fair and objective look at the Model S
But it wouldn't be fair to talk about Tesla's craftsmanship shortcomings without giving credit to the company's impressive accomplishments with the luxury sedan and new technology. After all, the vehicle is outselling all comparably priced cars in North America -- and orders continue to rise faster than production. In fact, even in North America, where Tesla has established its largest presence, order growth outpaced the rest of the automotive industry in Q2. 

The Model S' impressive performance, verified on Consumer Reports own tests, is likely one of the major factors driving robust sales and growing demand. The overall driving experience is simply hard to match.

Model S Performance model gets to 60 in 3.9 seconds, according to Zero to 60 Times. Image source: Tesla Motors. 

"Car nut or not, EV fan or not, everyone has raved about this car, impressed with its smoothness, effortless glide, and clever, elegant simplicity," wrote Consumer Reports in the same report it highlighted some of the quirks that may end up playing a role in a downgrade in the vehicle's reliability score.

And the car's unmatched safety ratings are probably a key driver for growing demand, too.

Of course, with around 40,000 of the Model S on the road, and having had only several years to collect and respond to owner feedback, problems are inevitable. Further, there seems to be a consensus among Model S owners that the vehicle's advantages, both those unique to electric vehicles generally and to Tesla specifically, over a gasoline car still outweigh its shortcomings. A November 2013 Consumer Reports' owner survey of Model S owners resulted in a satisfaction score of 99 out of 100. The score was the highest Consumer Reports had seen in years.

Model S interior. Image source: Tesla Motors.

High owner satisfaction, however, is no excuse for delivering average reliability for a car that has a starting price around $70,000 and has an average selling price of about $101,000. That's why it was no surprise that during Tesla's second-quarter earnings call the topic of quality control surfaced several times.

Fortunately, Tesla not only acknowledged the issues, but the company also said that it is already making meaningful progress in addressing them. CEO Elon Musk suggested during the earnings call that quality in the latest serial number cars may be significantly higher.

We definitely had some quality issues in the beginning for the early serial number cars, because we're just basically figuring out how to make the Model S. And I think we've addressed almost all of those in production cars. I mean not all, but the vast majority have been addressed in cars that are being produced today.

And the remaining issues get attention from Musk himself. Musk said that every week he has a product excellence meeting with a cross-functional group that includes engineering, services, and production. During the meeting "all the issues" that customers are reporting with the car are addressed. The goal of these meetings is to get to the point that the car never needs to be serviced, Musk said. "And I think we're getting there quite rapidly."

Unfortunately, improvements in late serial number cars will likely play only a small role in Consumer Reports' 2014 reliability report that will be updated in September. But, hopefully, Musk's efforts on product quality will begin to pay meaningful dividends in 2015 and beyond.

Warren Buffett's worst automobile nightmare (Hint: It's not Tesla)
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to ride this megatrend. Click here to access our exclusive report on this stock.


Read/Post Comments (10) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 13, 2014, at 9:17 AM, orthophonist wrote:

    A fair and balanced discussion of a few nit-picking issues. The concept of a car never requiring servicing is mind-boggling, enough to send most conventional car dealers into an anxiety attack.

  • Report this Comment On August 13, 2014, at 10:08 AM, MShamis wrote:

    Good for Tesla! I see this company’s stock continuing to go up and up. Most first edition cars have issues at first. I have no doubt Tesla will fix them and will continue to please their customer base.

  • Report this Comment On August 13, 2014, at 10:52 AM, TMFSpiffyPop wrote:

    Well done, Daniel. Good to hear both sides. By the way, there's a typo to fix above (search for the line that says "still outweigh."

    Keep up the good work. --David

  • Report this Comment On August 13, 2014, at 7:12 PM, gregory3737 wrote:

    I can't find the typo, can you point it out? The subject of that sentence - "advantages" (not "car") - is plural and requires the plural of the verb - "outweigh" - so it's not that, right?

  • Report this Comment On August 14, 2014, at 9:10 AM, TMFDanielSparks wrote:

    Glad you enjoyed the article, David. Also, we grabbed the typo. Thanks!

  • Report this Comment On August 14, 2014, at 11:58 AM, JSergeant wrote:

    its should be it's

  • Report this Comment On August 15, 2014, at 3:07 PM, kkconway wrote:

    I bought my Model S a year ago this week, and had some of those issues, including the dreaded black screen, but agree with the 99% of owners who love the car. Some cars might be a bit more consistent and failsafe, but the minor annoyances are still few, and the performance, comfort, coolness and gas station avoidance outweigh that stuff. Range anxiety will always be number one, and once the plunge is taken, it's soon a no-sweat deal, too. The new recharging stations nationwide have free power-ups. How cool is that!?!?

    Kevin Conway

  • Report this Comment On August 15, 2014, at 4:15 PM, RxPro wrote:

    The ultimate drawback is still the range anxiety. Although the Model S's range is significant, you still have to plan any trip around charging stations, which for a $100k car is a bit of a let down.

    Until more stations are available, the Chevy Volt is really the only recommendable electric vehicle IMO.

  • Report this Comment On August 15, 2014, at 5:34 PM, TMFDanielSparks wrote:

    @RxPro,

    I contend that the fact that when you are driving locally that you don't have to stop to fuel up (or charge up) any more (because you wake up with a full charge every morning) more than makes up for having to stop at increasingly conveniently located charging stations when traveling long distances.

    I fuel up my gas tank twice a week. And I travel beyond 265 miles only several times a year. I'd opt to only have to fuel when I travel long distance (even if it took 20 minutes to fuel) any day if I could get out of filling up my tank twice every week.

  • Report this Comment On August 15, 2014, at 5:40 PM, dancingpig wrote:

    come on, the Chevy Volt is a hybrid car. You won't enjoy the design beauty of a pure EV.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3068484, ~/Articles/ArticleHandler.aspx, 10/1/2014 8:58:33 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement