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Tesla motors case study
- 1. Tesla Motors Case Study How Elon Musk manages the Model S and the company’s reputation.
- 3. Problem 1 Problem 2The Model S Tesla released Model S in 2012 CNET had a problem-free, 5 star review of car’s capability Motor Trend’s 2013 Car of the Year 265 Miles Per Charge 0 to 60 in 3.2 seconds 50,000 vehicles on the road “Supercharger” network The New York Times In 2013, NYT Journalist John Broder reported that his test- drive went horribly wrong. Stock plunged 13% Consumer Reports In 2015, Jake Fisher reported that Model S scored 103 out of 100 point test. Removed previous score Stock plunged 10% and continued.
- 4. Current Challenge: What went wrong? The Company “Pop Goes the Tesla Bubble” It’s Publics “Tesla Autopilot Tried to Kill Me!” “Statistically speaking, this car is more likely to have problems than the average vehicle.” “103 out of 100.” “User Generated Video Creates Negative Buzz Around Tesla’s Model S 7.0 Update.” “Does Tesla “Tesla Autopilot Saves the Day!”
- 5. Previous Challenge: What went wrong? Who let John Broder in the room!? The Company Supercharger network reportedly failed to charge the car in the 40 minute time-period! Car battery died before reaching 200 miles! “Ran out of juice.” & “Had to be towed.” “Supercharger network?” It’s Publics The article increased negative conversion, and the stock took a hit. WANTED John Broder, Hates EVs How can this happen? Where is the service station? Will temperature really effect my battery’s life-span?
- 6. 2013 Solution “Stick to the facts.” Musk
- 7. Impact CNN Does their own Test- Drive
- 8. 2015 Solution “Divert the attention.” http://insideevs.com/wp- content/uploads/2014/10/autopilot.jpg
- 9. Impact $262 Oct. 2015 After Consumer Reports released a negative report on the Model S, Tesla's share price ended 21% lower than previous 3rd quarter report, and continued to fall into January 2016. $207 Nov. 2015 $193 Jan. 2016 Consumer Report Released
- 10. 02.13.13 NY Times posts article by John Broder who test drove a Tesla and encountered problems. 02.18.13 Find that cold weather inflicts a 10% range penalty, and using the heater uses more 10.21.15 Elon Musk responds on Twitter that 97% of owners expect next car to be a Tesla. 10.23.15 Curve speed adaption, controller smoothness, better lane holding on poor roads, improved 10.23.25 Owners discovered autopilot setting on their Tesla’s. Stock went down 10%.
Editor's Notes
- Elon Musk - innovator and INFLUENCER Born in South Africa Created Pay-Pal and sold it for under a billion dollars. Venture Capitalist started Tesla Motors and Space X and purchased Solar City to complete the perfect sustainable energy conglomerate. Brought all three companies out of bankruptcy twice.
- In 2012, Tesla launched the model S as the world’s first premium electric sedan with a bundle of big promises. Tesla Motors is a very new company, their car releases are far from perfect but are becoming more streamlined. Indubitably, the company has run into a few problems. We are going to break down two case studies and show you what was learned and applied from each.
- What Went Wrong: The Company: OK. So Consumer Reports has a hundred-point scoring system. Initially, the Model S scored 103. It went to 11, y'all. They had to change the scoring system. Fisher says Teslas perform incredibly well. However, after a model upgrade and reliability surveys, Consumer Reports, which is a nonprofit, removed its recommendation and Tesla’s stock dropped 10%. The Consumer Reports reliability survey collected responses from 1,400 Model S owners, some of whom reported problems with the drivetrain, power and charging equipment, sunroof and "giant iPad-like center console." It’s Public's: Well, after autopilot came out last week, drivers started taping themselves using it going at high speeds with their hands off the wheels and video cameras, and things went wrong. This has been more dangerous for the company than the report itself. Let’s take a look at one of those videos that went viral only a two weeks ago. A Tesla spokesperson says the company explained the feature to customers and has repeatedly warned them to keep their hands on the wheel.
- So after the article went viral, what did Tesla do to respond to what John Broder said about the Model S? well, WHAT DID TESLA DO: Elon Musk called out John Broder and the NYT for their “unethical” principles by publishing the trip data on the “Tesla Blog” with exclusive commentary. John Broder and the NYT did not anticipate the Tesla Motor company to store “trip-data” of every Model S car-ride. Musk stated that Broder’s comments were fake and that he tried to sabotage the test drive. Musk also said that Model S never had a chance with John Broder and called out the New York times saying, “When the facts didn’t suit his opinion, he simply changed the facts. Our request of the New York times is simple and fair: please investigate this article and determine the truth” He was lying about plugging in the car and that he drove in circles over half a mile in a tiny parking lot. Broder stated that the battery died before reaching 200 miles, but it turns out according to Musk, Broder was inconsistent with his charging habits. Elon thoroughly clarified what happened there he followed up and made sure the NYT was accurate. WHAT DID THE NEW YORK TIMES DO: The New York Times public editor Margaret Sullivan admitted that she did find problems with reporter John M Broder’s note-taking and judgment after his negative review. For this she apologized to Tesla Motors. Who let John broder in?According to Musk, John Broder was hired to only write about future advancements in their Supercharger technology. This was partially Musk’s fault because he hired Broder without reading his past articles and were unaware of his outright disdain for electric cars. With all that he did to keep his reputation, his biggest mistake was to hire someone who wasn’t a fan of electric-cars.
- POSITIVE: Media Outlets such as CNN, CNBC, and Consumer Reports did their own replica of the New York Times test-drive Tesla had full support of some of their customers, their customers as well did their own Test-drive showing that the route can be easily done with Tesla Supercharger network Tesla made sure to answer the questions that the public might have: Musk set the record straight about the supercharge network stating, “Supercharging works well for a long road trip, even in a cold, snowy winter. Nonetheless, we will keep increasing the number of Superchargers, improving the software in the car (via over the air updates), and the technology behind the Supercharger itself.”Musk also said that Superchargers will be hitting the East Coast, reducing the range between the ultra-fast chargers from 200 miles to a more comfortable 100 miles. NEGATIVE: Musk admitted to CNBC about his worries of the impact the piece in the New York times could have on his company/brand. Tesla shares on NASDAQ saw one of the biggest single-day declines since December. Shares went down 2.1% Mush, went on record to say that the negative review and bad press may have reduced the company’s value by $100 million. After Model s review a “few hundred” customers canceled orders for the Model S
- NOTES FROM MORGAN (Use at your own discretion) Tesla was able to add the autopilot feature through a software update without their customers having to take their cars into dealerships. That is the real news in innovation this week. Tesla can push new features to their vehicles at any point in time, as evidenced by this autonomous feature that they were able to push out that effectively changed the way that vehicle was driven - overnight. “I think what has shifted is owner expectations, not the number of flaws,” he said. “The early adopters tend to be very forgiving of glitches. As you expand the consumer base you get people who have less tolerance for problems.” ~Michael Karesh from TrueDelta.com http://www.latimes.com/business/autos/la-fi-hy-tesla-reliability-consumer-reports-20151021-story.html (LA Times to the Rescue) Tesla has had a system called forward collision warning with autobrake which has been in Tesla for a while. Consumer reports said they have a system called collision warning didn’t give Tesla credit Tesla updated its software features without having the drivers to take their cars to dealerships. The software updates have made Tesla vehicles go faster and improve safety functions like collision warning systems and automatic braking, their software is advanced enough to extend the driving range of its cars as well. Consumer reports survey included a lot of earlier production cars, Already addressed in the new cars. consumer Reports drops model S recommendation
- After Consumer Reports released a negative report on the Model S, Tesla's share price edged sharply lower. More significant than the report itself is the dramatic reaction to the report. The negative reaction has further eroded confidence in Tesla. A lack of confidence is a central problem to Tesla's valuation going forward. Examining the role of confidence alongside key concepts from behavioral finance helps to explain why a lack of confidence is so problematic. In particular, looking at concepts like the disposition effect, cognitive dissonance and endowment bias help to explain Tesla's volatility and why its share price will continue to fall lower. “Tesla has sold cars without any publicity, and has instead relied on 'word of mouth' recommendations. Issues with reliability may challenge the appeal,” ~Brian Johnson, an analyst with Barclays Research. Tesla shares plummet after consumer report drops model S recommendation. Tesla has long been a darling of the technology world. Even after its recent declines, Tesla is worth north of $25 billion, valuing it well north of Twitter, for example. Shares of the company peaked this summer, cresting the $280 mark.
- Tesla first encountered a problem in 2013, after the New York Times posted an article by John Broder who test drove a Tesla Model S and encountered numerous problems on his road trip. He claimed that the cold weather caused him to not be able to use the heater because it required too much electricity. It later turned out that the article and facts were untrue and that Broder hadn’t filled up the charge all the way like he had claimed. The next problem was encountered in 2015 after Tesla owners discovered the autopilot setting. Some owners claimed it was dangerous and caused them to almost get into accidents, while others claimed it had prevented them from getting into accidents. However, numerous Youtube videos were posted by Tesla owners that were using the autopilot setting dangerously and at high speeds. This caused Tesla stock to drop by 10%. They tried to rebuild their credibility by saying that they had informed owners when they bought the car about the autopilot setting and that they still need to always keep both hands on the wheel. In both cases Consumer Report messed up in the rating of the Model S and both the LA Times and TrueDelta came to Tesla’s defense. Because of Elon Musk’s credibility in the technological world, many consumers believed him and his promise that Tesla lived up to the highest standards.