It’s Not Just Quarterly Losses — This Is What Will Kill Tesla

It's a cultural issue

The new Tesla Model Y
Tesla is strong on technology, but build quality and service issues leave some owners with a bad taste in their mouths. [Photo: Tesla]

“Yes, it’s that bad.”

In the last quarter, Tesla posted a $408 million loss in the second quarter of 2019. While many would argue that losses aren’t that important in the long run, there’s a bigger issue at play that will have a lasting impact on employees, consumers and their perception of Tesla moving forward.

Tesla needs to improve its build quality, customer service, and labor relations in order to survive against the coming competition.

There’s no denying that Tesla has been a phenomenon in the automotive world. The company continues to dominate the electric car discussion, forcing other automakers to drastically rethink what they’ve been doing for the past century. Waves of new electric cars are coming in the next decade, and Tesla can take a large amount of credit for that. But that doesn’t necessarily mean the company will stay in the lead, unless it addresses its after-sales support. In short, things start to go wrong once owners actually buy their cars and have to deal with Tesla’s service centers.

Quality issues, slow repairs

And many will need to visit a service center early on in their car’s life, due to the company’s ongoing build quality issues. As Tesla has ramped up its production capacity, particularly with the entry-level Model 3, a wide array of quality issues have come to light. A few months ago, a CNBC report indicated employees had to cut corners to meet aggressive production quotas. Tesla is by no means alone in having quality control issues, as even major players like Ford and Fiat Chrysler have faced their own issues in recent weeks. However, Tesla has not consistently engaged its customers when service issues come up.

Trending troubles

At least two new Twitter hashtags have emerged documenting owners’ issues with their Teslas: #teslaserviceissues and #teslaqualityissues. Through social media, owners have seized the chance not only to inform other owners and prospective buyers, but take Tesla to task for a wide array of problems with their cars.

Whether it’s new buyers or long-time owners, service and quality complaints currently affect all of Tesla’s current models. Tesla owner Alex Kong had a laundry list of issues with his Tesla Model S, which he documented through Twitter. He’s clearly not alone in using those hashtags, as another owner named Michael also explained on September 20. “I will no longer recommend or refer to Tesla. We have a leak in our roof, and the date that Tesla can remove the panels to fix the roof, is in March, 6 months away. This response time is completely unreasonable. Tesla has done nothing to help.”

Although the Tesla app should allow owners to easily schedule service appointment, it’s not always quite so easy. [Photo: TeslaMotorsClub forums]

These are just a few cases, and those where owners have managed to get their Tesla serviced at all. Owners are supposed to have the option to schedule service through the Tesla app, yet the option disappeared in a recent update, according to some like Tesla Motors Club member jmcmill. That normally would not be an issue, but Tesla makes it extremely difficult to contact a service center directly on the phone. Even when you try to call your service center directly, the automated system encourages you to schedule an appointment online.

Little contact

Take the case of TFL’s Tesla Model 3. When we damaged the car shortly after its arrival in April 2019, it took the better part of three months to repair $10,000 worth of damage. Some of that wait came down to correspondence between the Tesla-approved repair shop and the insurance company. That said, there were several times throughout the process where we had little contact on the Model 3’s repair status.

Even when you’re able to bring the car to the service center yourself, you may be in for a long wait. At least, longer than Tesla suggests on its own service website. “In the rare case that your car requires a shop visit, service will be quick and seamless — and likely be complete before you finish your coffee. When we took our Tesla Model X in for a service appointment (more on that to come on TFLcar), it took over an hour to sort a minor window seal issue.

Fortunately, our Model X issues were sorted on-site. Those who have to drop their cars off for longer periods of time, however, are running into problems with Tesla’s loaner program. While Elon Musk promised loaner cars for Tesla customers in 2017, the company slowly stopped offering a comprehensive loaner program for its customers. Instead, Tesla more recently offered Uber credits to get owners to their destinations from the service center. Musk later later said in a tweet: “This isn’t correct. Will address.”

Now, per our last service experience, Tesla does offer older loaner cars to owners on a first-come, first-served basis. What’s more, the service center will notify owners via text message when no loaners are available.

Tesla’s labor law violations

Apart from the cars’ endemic build quality issues and poor customer service, the company also needs to address its labor relations. In a Friday ruling, California judge Amita Tracy ordered Tesla to cease and desist from anti-union policies over the past several years, including policies that block employees from distributing union literature at the company’s Fremont facility, or interrogating employees about their union activities.

According to that ruling, Tesla unfairly disciplined employees who engaged in pro-union activity. “Such pervasive unlawful conduct,” the document states, “warrants a broad cease-and-desist order and a notice reading.” More specifically, the cease-and-desist decision ordered Tesla to reinstate an employee it had fired back in October 2017, and another it had formally disciplined during the same period. The judge also honed in on a May 2018 tweet from Musk, which commented on employees unionizing:

While Tesla faces legal ramifications for these specific actions, this is not the end of the story. Again, employees have taken to Twitter to express their concerns over Tesla’s working culture. One notable point came from earlier this year, where some employees said they were “afraid” to take leave.

What this means for Tesla’s future

Even in light of Tesla’s build quality issues, plenty of customers still love the cars and what they represent. Zero-emissions transportation is a hot topic, and Tesla’s technology and attitude, as well as Musk’s approach, put the company ahead of all other automakers to deliver a new era in personal transportation. However, the company seems to lack what other automakers have grasped in their longer existence. That is, a successful company is one that looks after its customers and its employees.

As it stands, Tesla’s long-term sustainability does not depend solely on bringing in new customers, but keeping the ones it has. Current adopters are the ones who could buy Teslas again in the future, and tell people they know about whether they should buy the company’s cars. Instead, Tesla seems to be focused on pressing forward, hitting production targets and acquiring new customers, leaving its after-sales service and support to suffer. What’s more, a reportedly acrimonious working culture and high employee turnover will not help Tesla’s outstanding build quality problems, either.

If the crop of unsatisfied customers continues to grow, that can’t help but ultimately lead to major trouble for Tesla, leaving it vulnerable to its encroaching competition.

Tesla Model X
[Photo: Tesla]

Let us know about your experience

As with every other manufacturer, there are some owners who won’t experience any issues with quality or service. Either way, if you do own a Tesla, we want to hear from you. Have you had any issues with your Tesla? Let us know in the poll below and send your experiences to info@tflcar.com.

Editor’s Note: We put this piece together based on what we’ve heard from other Tesla owners, as well as our own experiences, and were alerted to the “#teslaqualityissues” and “#teslaserviceissues”. This is not meant as a treatise against Tesla, but as a report on the real issues the company currently faces, based on recent reports and legal rulings.