Now the heading of the JD Power story said it was a ranking of the "most reliable car brands," which once again prompts me to encourage people to read things, because that isn't at all this study did. The big clue was that value products were at the top, and premium products were at the bottom, with Tesla last. Now how could a company become the most valuable car company in the world and have the worst quality? The answer is, it couldn't. What the survey seemed to do instead measure was expectations. The more you pay for a car, the higher your expectation that it will be trouble-free. But more expensive cars are more complex, they are more often built to order, and there is more opportunity for things to go wrong. If you buy a Dodge, your expectation is low, and the complexity is low; if you buy a Tesla, you think you're buying an advanced appliance -- and as good as Tesla is, the car isn't there yet. What I mainly found fascinating is that Jaguar, Mercedes-Benz, Volvo, Audi, and Land Rover were all at the bottom, just above Tesla. Except for Land Rover and Jaguar (which have had historical quality issues) the others typically rank towards the top in terms of customer loyalty, which suggests these brands do some things right -- and Volvo, in particular, is a brand connected to very high durability.

Tesla's Advantage

So the major premium brands do have an expectation problem, and Tesla, I know, has a considerable quality-control problem. A friend of mine just bought one, and Tesla not only got the build wrong (wrong accessories and he didn't want the white interior he got), the paint had visible defects. But he still loves the car and is very excited about the performance and experience. The ability to manage expectations and maintain loyalty is what I think the car industry is, as a whole, forgetting. Success is tied to customer loyalty and a healthy sales channel. Tesla owns its sales channel, which allows them to manage problems better. However, although those problems make the company less profitable, they don't bubble up to a point where they get addressed in a timely fashion. However, because of that direct sales channel, Tesla builds a deep relationship with its customers, and they were the first to explore long-term customer relationships truly. For instance, a Tesla regularly gets software updates with additional capabilities, not just bug fixes. So an update is often kind of a like a birthday or Christmas gift. Tesla also has rolled out programs that even allow you to update your car or replace it with the loaner you get when your car is in for service. They've had promotions for cool things like bikes and surfboards tied to the brand, and they seem to be willing to explore ways to engage with customers between cars. This behavior is in contrast to most car (and even motorcycle) brands that seem to care about you only when you are in the market for a new vehicle. Tesla is getting very close, particularly if you lease one, to the concept of CaaS.