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The Intriguing Psychological Puzzle of Tesla Ownership
How can an expensive, poor-quality vehicle have satisfied and loyal customers?
Posted Jan 18, 2021
“Oh, zero. Customer research. Haha hahaha. No. I mean. I mean, we just made a car that we thought was awesome. You know, it looks super weird.” —Elon Musk, CEO of Tesla, Inc., when asked if Tesla conducted customer research in designing their new vehicle.
There’s something peculiar about the psychology of Tesla vehicle owners that runs contrary to every well-accepted theory about how customers are supposed to behave. Our understanding of customer satisfaction is based on decades of research. It relies on data from hundreds of thousands of customers in every conceivable industry (even the IRS and U.S. Postal Service are included). Core to this research is the idea that a product’s quality influences customers’ satisfaction, leading to loyal attitudes, marked by repeat purchases and positive word of mouth. In other words, high-quality products make satisfied and loyal customers, and poor quality products make dissatisfied and unhappy customers (see the figure).
Tesla has turned this theory of customer satisfaction on its head. To see why this is the case, consider the following two data points about the quality of Tesla vehicles and the customer satisfaction of Tesla owners.
Tesla Quality
In the 2020 Initial Quality Study conducted by the marketing research company J.D. Power, Tesla was the worst-performing company, reporting 250 problems per 100 vehicles during the first 90 days of owning a newly purchased vehicle.
Tesla Customer Satisfaction
The 2020 J.D. Power Automotive Performance, Execution and Layout (APEAL) Study measured owners’ satisfaction based on their “experiences with design, performance, safety, usability, comfort, perceived quality, and other factors.” In the study, Tesla received the highest score of 896. To give context, Porsche had the next highest score of 881.
The Psychology of Tesla Ownership
Two studies from the same marketing research company, but with completely different results. Tesla customers own a (relatively) inferior product yet are very satisfied and loyal. How is this possible? How can a brand be the worst performer with respect to quality and yet be the most beloved by its customers? We can speculate and provide two explanations that, in reality, boil down to one underlying reason.
- Explanation 1: Consumers buy Tesla vehicles for reasons other than reliability or the functional aspects that they use to judge other vehicles (horsepower, cost per mile of driving, etc.).
- Explanation 2: Tesla owners are far more forgiving of problems with their vehicles than owners of other vehicle brands.
Both explanations boil down to the fact that even though Tesla makes relatively mundane products (automobiles) that are judged mainly for their functional characteristics, its customers are using an entirely different decision calculus to evaluate Tesla vehicles (and the brand).
Tesla Investors Feel the Same Way
We only have to look to the stock market for evidence that Tesla is seen differently than other automobile brands. Just like the disconnect between the quality and customer satisfaction of Tesla vehicles, Tesla’s stock price shows a remarkable break from established business valuation theories. On average, other automobile companies’ stocks are priced at around 20 times their annual earnings (for example, GM’s stock is 23.1 times, while Toyota’s is 16.1 times its annual earnings). By comparison, Tesla’s stock is 1,635 times its yearly earnings as I write this. Tesla’s investors, like its customers, see the company through rose-colored glasses in a way that defeats economic theory.
Tesla Owners Focus on the Brand's Future Vision, Looking Past the Present
These dissociations from conventional theories arise from the Tesla’s customers and investors share of the company’s future. Essentially, their vision is divorced from the present reality.
Tesla makes cars with the latest technologies, such as electric power, self-driving technology, over-the-air software updates, and an autopilot that are years ahead of other vehicles. What’s more, it has a charismatic, eccentric founder in Elon Musk, who’s considered to be a visionary in the vein of Steve Jobs. Owning a Tesla vehicle (or stock, for that matter) is meaningful in a way that owning other products and services are not because it gives customers a rare opportunity to link their self-identity with many positive and rarely-to-be-found qualities.
It is for delivering a glorious vision of the future that customers are willing to discount and forgive Tesla’s current problems and inconveniences and love the brand. This behavior is an anomaly that other brands cannot replicate. For consumer psychologists, the reactions of owners and investors to the Tesla brand is the exception that proves the rule.
Facebook image: Tudoran Andrei/Shutterstock
Why is it that odd? Peloton
Why is it that odd? Peloton is another company with questionable quality products (the tread+ is has a nightmare list of failures from people who bought one).
Owner feedback
This didn't quite resonate with us as Tesla owners. If you are interested in the psychology of buyers... We are two electrical engineers in the semiconductor field and work on AI and appreciate innovation. Our mindset for buying the Model X was a few things: 1.) We wanted to go electric and needed the long range to go regularly from MA to VT, 2.) We love the fact that even if there are software bugs that are annoying, the turnaround time on fixing them is quite quick, and 3.) You are not buying a static product... novel features get added over time and rolled out and are great surprises. Value increases over time. We can accept the annoyance of some things knowing that they are taking risk and implementing new technologies. In short, we like being part of the evolution and giving feedback into the process, too.
Yes, it was annoying when I put my ski boots on and the AI thought I left the vehicle and the falcon door clamshelled on my back (and after the next software update it didn't do that anymore), but I also love the crash avoidance and the fact that video is automatically captured when some jerk almost causes an accident (handy for an insurance claim) or to see just how close I came to hitting the deer on the highway. It is also amazingly quiet and great in the snow so sneaking through the woods to our house and not disturbing wildlife is a unique plus.
Our other car is an Audi and we were Audi fans for years. I am still very satisfied with our Audi (like a 9.5/10 consistently against expectations). With the Tesla it is more like swinging between a 15 (never imagined a car could do that) and a 5. When Tesla fails, they admittedly do so in a grand way because they took a risk and I can respect that. When my Audi fails it is usually some mundane faulty wiring. For us, the highs outweigh the lows. I'd buy another of either brand in a heartbeat.
Julia, thank you
Julia, thank you for your comment about your experience as a Tesla customer. I am sure readers will find it insightful, I certainly did. All the best, utpal
A part of the problem is credulous reporting.
The following quote from the article is inaccurate but quite telling.
Tesla makes cars with the latest technologies, such as electric power, self-driving technology, over-the-air software updates, and an autopilot that are years ahead of other vehicles.
Truth is their technology on all these things are behind the rest of the industry. they are especially behind on the self-driving there are companies that are already running taxis without drivers. It's a false statement often repeated and often made by Elon Musk. There is the
It's quite interesting that someone with considerable expertise in one field psychology would express expertise in something they don't really know about in this case engineering and specifically self-driving. That this credulously gets repeated so often does disturb me and creates significant misinformation in the public mind.
The conclusion that it is about linking their self-identity to the perceptions is correct I think. But it is a perception rather than reality. Much like with Apple computers that are between 1-4 years behind the competitor's hardware depending on the product cycle. People believe despite empirical evidence that they are using a high tech machine rather than last years at best hardware. Because their self-identity (that of being an intelligent person with the latest tech plus conspicuous consumption )is attached to these things. They can get very delusional and aggressive about things to the point they will accuse others of being baby killers and similar rather than address a point someone has made. Interestingly both Apple and Tesla attract a disproportionate amount of unpleasant people.
I also wonder who much this is with the whole Tech Bro thing people who love tech and use it as an identity whilst not know much about it. Still, I am glad someone has starting talk about this issue it seems to me to be a form of masochism. Blindingly loving something that is actually rather bad. Ther is also I think an interesting phenomenon when people make bad choices they often evangelise about those choices to others.
Tesla reliabilty
I had Mercedes and BMW'S. Now I have two Tesla's. one 4 years and the second 2 years. Have has items fixed on the Tesla's, but never had to have them towed-can't say the same with the German cars.
Tesla pluses-no car dealer sales force-no car dealer service writer s-no gas stations.
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