Model 3 Reservation Holder Survey Underlines Tesla’s Mass Market Challenge

 

They waited for reservations… will they also wait for service? (image courtesy Investors Business Daily)

Much of the critical coverage of Tesla Motors, both here at Daily Kanban and elsewhere, has focused on issues that Tesla is able to get away with as a small-volume manufacturer serving an affluent, early-adopter market segment. From manufacturing bottlenecks to quality control problems, from inconsistent, hype-happy communication to poor service, Tesla has been able to weather a storm of problems because its customers and fans are so patient with and passionate about the company. But as Tesla moves from expensive, low-volume cars to the mass market Model 3 these problems are taking on a new significance. In part this is because higher volumes increase the likelihood of quality and service problems, and in part it is because mass market customers who depend on a single car for their daily routine are more demanding than luxury car buyers who can always take the Lexus to work if their Tesla is broken.

Given Tesla’s pattern of releasing cars with insufficient testing as well as its chronic quality problems, it’s safe to assume that the Model 3 will face its fair share of issues. Thus, investing in service infrastructure that will allow Tesla to promptly and affordably repair and upgrade high volumes of Model 3 is extremely important. As Bertel has written about at Forbes, Tesla is behind the curve on those investments and it will cost billions to catch them up. Just yesterday a piece by former Tesla employee Evan Niu dramatically illustrated just how far Tesla has to go to improve its service time, which has dragged on for 8 long months in Niu’s case. Now an exclusive study of about 800 Tesla Model 3 reservation holders, EV owners and luxury brand car owners conducted last year on behalf of a major automaker and provided to Daily Kanban by an industry source, reveals why Tesla’s quality and service woes are so critical to the success or failure of the Model 3.

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Tesla Model 3 Development Work Constrained By Tax Relief Program

model3giftdk

Sketchy…

Documents filed by Tesla with the California Alternative Energy and Advanced Transportation Financing Authority and obtained exclusively by Daily Kanban have provided unique perspective on the electric automaker’s ramp-up to production of the Model 3. But there’s more to the story than the production side: Tesla’s equipment purchases are split between production equipment and tooling for the development and prototyping of Model 3, new versions of the Gen 2 vehicles and possibly even other vehicles hinted at in Tesla’s Master Plan Part Deux. This helps explain why the production volume increase from Tesla’s $1.2b investment in Model 3 is so modest, but what does it say about the state of the Model 3’s development?

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One Out Of Ten Cars Coming Down The Line Is A Reject, Tesla Says

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At a weekend event open to invitation-only Tesla customers, the electric carmaker showed off its factory, and “a reliable source with knowledge of the matter” told Electrek that Tesla is now producing “well over” 2,000 Model S and Model X vehicles in a regular production week.  This immediately made headlines, and the company was declared to be well on its way to its goal of 500,000 cars by 2018. At the same event, someone at Tesla admitted that the impressive production line produces garbage, but nobody seemed to notice.

More in Forbes.

 

Chrysler Is Still Waiting For Its Quality Turnaround

Who's laughing now?

Who’s laughing now?

In 2009, when Sergio Marchionne’s team presented the first five-year plan for what would become Fiat Chrysler Automobiles (FCA), his VP for Quality Doug Betts told attendees that Chrysler’s quality problems would soon be a thing of the past. Thanks to Fiat’s superior fit-and-finish standards and “World Class Manufacturing” system, Chrysler hoped to match the best mass-market competitors on quality by 2012 according to Betts. Three years after that initial goal had passed unaccomplished, Betts is gone but FCA’s US-market brands are still occupying the bottom tier of Consumer Reports’ most recent automotive quality survey. With quality problems plaguing even its “halo” Hellcat and Ecodiesel engines as recently as last week, it’s clear that Marchionne hasn’t been able to bring the long-term quality backmarker up to pace.

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“Car Guys Versus Bean Counters” Is A Crock Of Shit

Th neverending story... (the cover of GM's 2006 annual report)

Th never-ending story… (the cover of GM’s 2006 annual report)

When Bob Lutz’s book “Car Guys vs Bean Counters: The Battle For The Soul Of American Business” first came out, my review was somewhat distracted by the fact that Maximum Bob had name-checked me in it (or misrepresented a NY Times Op-Ed of mine, depending on how you look at it). Still, the book’s basic problem was all-too familiar in the world of auto executive coverage: the benefits of insider insight were strongly counterbalanced by objectivity problems. I noted

 …though the title sets up an internal conflict within GM, Lutz spends so much space blaming outsiders for GM’s woes that, by a third of the way through, it begins to feel more like apologia than clear-eyed soul-searching… 

…In what is likely part insightful truth and part gentlemanly whitewash, Lutz frames his battle as being not with any one “bean counter” but a faceless (and therefore, blameless) culture in which management-by-the-numbers outweighed personal accountability. Lutz identifies individual “true believers” who he recruited in his design and product-led transformation of The General, but essentially absolves the thousands of others, including then-CEO Rick Wagoner, of any responsibility for GM’s continued decline and eventual collapse.

Lutz’s narrative of post-2001 GM history, in which he led a comeback of “car guy” talent against the decades-long rule of the “Bean Counters”, has been on my mind quite a bit in recent weeks, as GM’s decade-old dirty laundry has been piled into the public’s lap. Already, Congress’s investigation has made it clear that GM rejected fixes to now-recalled ignitions for “business case” considerations, making the ignition scandal a fatal case of “bean counting” that occurred on Lutz’s watch. In light of recent revelations, Lutz’s claim to have been GM’s champion of product quality in a “Battle For The Soul of American Business” deserves another skeptical look.

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GM Recall: Answers Hiding In Plain Sight?

And all the investigations, all of Lutz's men/ couldn't figure out who was in charge of things then.

And all the investigations, all of Lutz’s men, couldn’t figure out who was in charge of things then…

In the wake of General Motors’ and Mary Barra’s public lambasting last week, at the hands Congress and Comedy alike, a new sense of gravity now surrounds the still-unfolding scandal. Combined with the shocking facts surrounding the defect itself, Barra’s performance paints a picture of a GM unable to establish basic accountability without outside intervention. In a recent interview with New York Magazine, and sounding more like a corporate consultant than radical activist, Ralph Nader advises Barra to act relentlessly, arguing:

Look what it’s costing them: It’s already at $750 million and growing. What’s it cost them in lost sales? All kinds of stuff spills out, even if it’s not directly related to the ignition switch. She knows that it’s just going to get worse and worse. There are going to be whistle-blowers, and plain envelopes, especially when the press sees prizes — they see Polk Awards, Pulitzers, and so on — once they get into that realm, there’s no stopping it.

This has all the elements. It’s a cocktail that gets it going. It is very difficult to get the press into that realm — take it from someone who knows from over the years.

Ralph’s right: Barra’s unconvincing performance last week has stepped up pressure to find the answers she wouldn’t provide, and there’s no knowing where some tough digging could lead. After all, there are answers that Barra refused to give still hiding in (relatively) plain sight. With the help of a single book and internet access, anyone can find insight into the problems that are stumping Congress, the media and Mary Barra herself… Let’s not wait for the investigation, shall we?

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Niedermeyer Tackles GM Recall Regulation At Road & Track

Can it be saved? Or is there another way?

Can it be saved? Or is there another way?

In my last Bloomberg View column, I asked the question on everyones’ lips: how do you solve a problem like General Motors? I gloomily concluded that only creative destruction at the hands of consumers would truly “fix” a culture as broken as GM’s, in light of the firm’s nearly half-century of arrogance and failure. But with congressional hearings about to begin, Road & Track asked me to explore the regulatory side of the problem in a little more depth. Perhaps, one editor suggested, NHTSA’s ineptitude, underfunding or industry capture adds to the government’s responsibility for this mess.

Clearly this is the case. The shameful situation with David Strickland and Chrysler/Venable proves that Americans can’t trust NHTSA to serve their interests. But is there really evidence that NHTSA could have forced a GM recall any earlier than it did? Given that GM execs appear to have hid the problem from themselves, NHTSA would have to embed deep within every automaker to catch this type of problem. Instead of throwing more money and mandates at NHTSA, which clearly has its own culture issues, it’s time to take a different approach. Rather than trying to hold an entire corporation accountable, lawmakers should create criminal penalties and whistleblower protections that force every executive and engineer to personally weigh the consequences of cutting corners in vehicle safety. As my R&T piece concludes:

The first line of responsibility for the public’s safety lies with the engineers and executives who design and build the cars … just as individual motorists are the first line in terms of their personal safety. Only when they individually face penalties that are nearly as harsh as those consumers face at the hands of their defects will they truly take safety as seriously as we do.