Consumer Reports has shocked the automotive world by downgrading the Tesla Model S reliability rating to “worse than average.”
Just last August, it blew a gasket over the Tesla Model S P85D, calling it the best car it had ever tested. It even had to revise the standards it uses to evaluate all other cars to account for the overall goodness of the test car. The praise was so glowing, people started to wonder if Consumer Reports had lost some of its famous objectivity and become just another corporate shill for Tesla Motors.
No need to worry about that any more. The Tesla Model S no longer carries a Recommended rating from Consumer Reports. Car makers move heaven and earth to get that rating because consumers (at least the ones who read Consumer Reports) place a great deal of weight on it when making their car buying decisions. Losing that endorsement is like getting poked in the eye with a really sharp stick.
What happened to the Tesla/Consumer Reports romance? As part of this year’s reliability survey, 1,400 Model S owners gave Consumer Reports an earful. They complained about an “array of detailed and complicated maladies,” primarily involving the drivetrain, power equipment, charging equipment, the giant iPad-like center console, and various squeaks, rattles, and leaks involving the body and sunroof.
Specific areas that scored worse on the 2015 model, compared with last year’s model, says Consumer Reports, are its climate control, steering, and suspension systems.
Tesla spokesman Ricardo Reyes was quick to point out that the company keeps in close communication with its customers to “proactively address issues and quickly fix problems.” He noted that over-the-air software updates allow Tesla to diagnose and fix most problems without the cars needing to come in for service, a feature not yet available from other premium vehicle manufacturers.
“In instances when hardware needs to be fixed, we strive to make it painless,” said Reyes, who went on to point out that, “Consumer Reports also found that customers rate Tesla service as the best in the world.”
That part is true. Consumer Reports goes out of its way to say that, “Despite the problems, our data show that Tesla owner satisfaction is still very high: Ninety-seven percent of owners said they would definitely buy their car again. It appears that Tesla has been responsive to replacing faulty motors, differentials, brakes, and infotainment systems, all with a minimum of fuss to owners . . . For its early adopters, Tesla has made a practice of overdelivering on service problems under the factory warranty.”
For more information on what impact the new Consumer Reports rating might have on Tesla sales, TechCrunch reached out to Max Zanan, a longtime New York-based automotive retail expert. He said, “Purchasing decisions aren’t guided by Consumer Reports. They’re guided by feel of the car, marketing, and word of mouth.” Zanan may know what he is talking about, but investors sent Tesla stock reeling after the news was announced. Shares plunged more than 10% during the trading day, before recovering slightly to close down 7% at $213.03.
Zanan points to Buick, the brand rated most reliable by Consumer Reports. “If you go to any Buick dealership on earth, you can buy a car on the spot because people aren’t interested in boring cars like Buick,” he says. Ouch!
He also notes that Korean automaker Kia and Hyundai survived poor reliability ratings in the 90s, only to become top sellers today. “In the ’90s, Kia and Hyundai had poor reliability ratings, too,” Zanan says. “With time, they improved their processes and are now able to build very reliable cars with which consumers are very happy.”
What Zanan totally overlooks is that Tesla is not some low quality input with a 30 year plan to sell cars in the US. Elon Musk and his crew have deliberately stood that traditional sales model on its head by choosing to start at the top of the market and work their way down to affordable cars. It is burning through cash at a phenomenal rate and does not have the luxury of waiting decades for sales success to find it.
The adverse rating by Consumer Reports could very well have serious consequences for the upstart start-up from Silicon Valley.