Consumer Reports revises Tesla review/recommendation

[docj]

Not to rain on RV's enthusiasm for Tesla, but Consumer Reports has just done a rather substantial pivot on its view of its cars: https://www.washingtonpost.com/news/the-switch/wp/2015/10/20/consumer-reports-the-tesla-model-s-may-not-be-as-perfect-as-we-thought/

[RV_]

Yep,

And a great buy opportunity was missed this morning but it may drop again. Most feel as I do. What seems to be an erroneous assumption is that none of us knew about issues that were mostly minor and handled by Internet. The hardware issues that came up were handled smoothly.

 

Here's another article from today about a likely motive for the strange 180.

 

Excerpt:

 

"After surveying 1,400 Model S owners, Consumer Reports downgraded the Model S's reliability to "worse-than-average" based on customer complaints that mentioned problems ranging from the drivetrain to the sunroof to the door handles. Jake Fisher, Director of Automotive Testing at Consumer Reports, called into question Tesla's brand reputation going forward as increased production and a more diversified product mix present more complex engineering challenges.

 

Fisher's concerns are valid, but the reaction to the news represents a double standard. Every automotive brand has reliability issues, and most of these brands have been in business for decades. Tesla has less than ten years of experience in building vehicles and has only experienced widespread release of two models with the Model X ramp up ongoing. Reliability is created when 1) a company cares enough and 2) a company has the knowledge and experience to minimize defects. I think the latter is the likely culprit for the issues we are seeing in the aging Model S vehicles.

 

The susceptibility to reliability issues is even higher for a car like the Model S, which has many new and experimental features that are a work in progress and not just at Tesla. Tesla also has the unique advantage of being able to fix software bugs, which are the cause of most issues, with a software patch applied to all cars without any need for the vehicle to be brought in for inspection. And if there is a hardware problem? Consumer Reports also found that Tesla owners rate the company's customer service among the best in the world.

 

There is also a very important statistic to note. While yes, the Model S is having reliability issues and yes, this will hurt the brand's image, 97% of Tesla Model S owners that were surveyed said that they would buy the car again. This is important because Consumer Reports is supposed to, obviously, construct reports for consumers. These reports theoretically help consumers make decisions on which products to buy. Therefore, I think Consumer Reports got this rating wrong.

 

Reliability issues are bad and Consumer Reports was right to downgrade the Model S's reliability score, but pulling the buy recommendation when 97% of those surveyed said they would buy the car again, which Consumer Reports itself attributes to Tesla's great customer service, seems like a disservice to the car and to consumers. My own personal theory is that this is Consumer Reports' reaction to the negative press it received for its 103 out of 100 performance rating for the Model S. Many were questioning whether the magazine is truly unbiased and whether the report was completely based on merit.

 

This release was a way for Consumer Reports to save face and distance itself from the Tesla rating. Obviously this is just my opinion, but with the magazine coming under fire for, among other things, being a puppet for the green lobby, this move appears to be a reaction to the criticism leveled against it. This isn't to say that the Model S does not have reliability issues, however I find it hard to justify pulling the buy recommendation when the car was rated a 103 out of 100 and when 97% of owners said they would buy the car again despite its problems.

 

Back to the topic at hand, minor reliability issues are not and have never been complete deal breakers. Unreliability in addition to lackluster performance in other areas is a recipe for disaster, but Tesla is in the opposite position; performance is stellar and reliability is an issue. Evidently, customers don't think the latter is a deal breaker. I can understand why TSLA is reacting negatively Tuesday, but in the long-run this is nothing that should concern investors. If Tesla does not learn from its experience and reliability issues continue to worsen then there is a problem. But Tesla as a company is still almost nothing more than a prototype by automotive industry standards and reliability issues early on, especially those that barely budge consumer sentiment, is nothing to make a fuss about."

 

Much more in the whole article here: http://seekingalpha.com/article/3586976-the-tesla-double-standard?auth_param=ee6s6:1b2ddfb:f88a927a1a7fe8644ea8e6f6d3f6b13a&uprof=46

 

The last time it was fires blown out of proportion to other brands. Ridiculous FUD that only stopped when the Porsche Paul Walker was riding in blew up on impact killing him and the driver almost instantly we hoped. There have been no mandated recalls or cover ups as Tesla fixed the problems not the blame.

 

It appears some pressure got CR's Fisher to start correlating unrelated ratings now in a way they never did before. I'm paying for a new house and furnishings, so I was disappointed I could not buy more when it hit $203.00. But if the sky is falling mentality spreads some more it could well become a really great buy opportunity.

 

I'm still bullish on Tesla and will re-evaluate my position in 2020 after the Model 3 has been out for a couple of years, the Gigafactory is complete and operating to capacity, Solar City and Enterprise make the Powerwall battery storage a commodity rather than oddity, and the economies of scale kick into overdrive.

 

Here is the chart of the past five years, the entire time Tesla has been publicly traded: http://finance.yahoo.com/echarts?s=TSLA+Interactive#symbol=TSLA;range=my