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

By Daniel Sparks, The Motley Fool,

When it comes to performance, Tesla Motors ' 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 pros that come along with owning a Tesla that a gasoline vehicle couldn't match still outweigh the vehicle's 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.

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The article Despite Impressive Accolades, Tesla Motors, Inc.'s Model S Has Problems originally appeared on

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Stocks
Referenced Stocks: TSLA

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