TSLA Tesla Inc

By Tim Higgins 

A month ago, Tesla Inc. scored the worst among other automotive brands in an influential study that tracked the quality of new cars. Now, a second part of the survey of those same customers shows that despite problems, they think highly of the electric-car brand for other, more emotional reasons.

The paradox is on display in the new Automotive Performance, Execution and Layout Study by J.D. Power, which measures owners' emotional attachment and excitement for their new vehicles. The results underscore the challenges auto makers face balancing attention to manufacturing quality while trying to capture a more elusive factor: coolness.

It helps explain why Tesla's sales have soared in recent years despite complaints about initial quality found in the J.D. Power survey released in June and other places, including social media. Buyers have recorded complaints about wind noise, ill-fitting body panels and other gripes not typically associated with vehicles that sold on average for $56,000 last year.

"The people love the car; they appear to be willing to accept the issues that come along with it," Doug Betts, J.D. Power automotive division president, said in an interview about the differences between the two studies. "In the end, loyalty will be something to look at, particularly if other companies start to offer some of the same features and things that Tesla has -- will they be lured away?"

In past reports that have raised quality questions, Tesla has pointed to its own data that it says show improvements. The company also says it takes customer feedback seriously and uses it to address issues.

Enthusiasm for Tesla has helped the Silicon Valley auto maker's stock more than quadruple this year. Deliveries of Tesla vehicles, including the Model 3 compact car that touts acceleration of zero to 60 miles an hour in 3.2 seconds, rose 50% last year compared with 2018.

Chief Executive Elon Musk had targeted more than 36% growth this year before the coronavirus pandemic raised questions about those plans. The company is scheduled to release second-quarter financial results Wednesday after the market closes and has said it would update its forecast for the year then.

In the survey measuring cars' appeal, Tesla scored 896 out 1,000 points, better than any other brand. The next highest score went to Volkswagen AG's Porsche, with 881, which ranked as the top premium brand, and Dodge, with 872, to stand atop the mass-market ranking.

This is the first time Tesla has appeared in the appeal survey, which relies on information gathered from car-registration data and measures 37 attributes, from sense of comfort to level of excitement.

Some states require the car maker's permission to use registration data and Tesla hasn't granted it. This year, however, Tesla's sales have grown so much in states where permission isn't necessary that J.D. Power could include the company. Because the researcher doesn't have data from all 50 states, however, it didn't include the Tesla results in its official rankings. For that reason, the car maker's No. 1 appeal score doesn't qualify it for official ranking.

Tesla owners raved about the electric powertrain, Mr. Betts said, as well as the touch screens and falcon-wing doors found on the Model X sport-utility vehicle. Even though the doors have been plagued with problems from the beginning, they have captured the popular imagination on social media and in the broader culture, such as being featured prominently in Jaden Smith's "Icon" music video in 2017.

In June, J.D. Power's Initial Quality Study found that Tesla vehicles had 250 problems per 100 vehicles compared with an industry average this year of 166 problems. Dodge and Kia Motors Corp.'s namesake brand tied for having the fewest problems. In the appeal study, Kia came in sixth among mass-market brands with a score of 844.

Other auto-industry observers have weighed in on the disconnect found in the J.D. Power studies. Reilly Brennan, general partner of Trucks Venture Capital, a seed-stage investing fund in the transportation sector, discussed on Twitter this week how he had made mistakes in valuing Tesla. "For years I believed their initial build quality would kill them 'once the big [car companies] create something similar,'" he wrote. "After 10 yrs there is still not a similar product and quality probs have declined."

Longtime automotive executive Philippe Chain described in a blog post last week his experience of going to work at Tesla in 2011 as vice president of quality after years working at other auto makers. He noted in particular gaps between Tesla vehicle body panels that would never have flown elsewhere.

"What would have been deemed as unacceptable by any car makers was seen as part of an ongoing process by Elon Musk who believed, rightly so, that the user experience of driving a truly innovative automobile would outweigh minor defects that will be eventually corrected," Mr. Chain wrote.

Write to Tim Higgins at Tim.Higgins@WSJ.com

(END) Dow Jones Newswires

July 22, 2020 12:14 ET (16:14 GMT)

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