Tesla and crossing the chasmFor many years, technology companies have been faced with the challenge of launching new products. We are all familiar with the phrase "early adopters" but how, as a technology and innovation company, do you transition through the different buyer groups to reach mainstream adoption? What is well known is that the motivation for buying changes as the customer base matures, and as a consequence the value proposition, be that the service and/or product on offer, needs to reflect the changing needs of the buyer.
Tesla aren't dealing with one transition either, it could be argued they are dealing with three:
- The move to electric cars and the associated change in mindset from Petrol to a different fuel type with very different characteristics of ownership.
- Tesla themselves as a company, teasing people away from the safety of the old school way of buying and owning cars, and once you own the car, a different approach to quality, ongoing change and service. The Tesla way is a very different ownership proposition to that of the traditional car makers to the extent that Tesla themselves don’t like to be considered a car company, they consider themselves a sustainable energy company.
- Finally, Tesla have aligned themselves to self-driving capabilities and while self-driving cars as a technical capability has little to do with electric cars, it is rare to see articles talking about self-driving without also talking about electric cars. There is widespread scepticism that full self driving technology will be available on everyday cars and more to the point whether its even wanted. By association, this is forming an additional barrier to accepting that Electric cars are a viable option today.
What is crossing the chasm?Back in around 1991 a guy called Geoffery A. Moore wrote a book called Crossing the chasm. This work recognises that technology as it enters the market goes through different communities of buyers, each with a different set of values and needs, and the biggest stretch is during the early adoption phase, the phase where products essentially come of age.
But not only do the requirements of the buying community change, technology itself goes through a cycle, what Gartner calls its Hype Cycle. This is the recognition that innovation and change is often driven by the development of new technology which then struggles to find a real world meaningful application, the early use cases and examples often missing the mark.
These elements are related although the fundamentals behind them are slightly different. Both however are relevant to Tesla.
Buyer types and where the chasm appears.The different buying communities are represented in chart below:
From the chart we can see there are various classes of buyer type, but there is a significant gap in the path, moving across the early adopter category. Innovators are driven by the latest technology and pushing new boundaries, their motivation is to be at the forefront, they take pleasure from the journey as much as the product, breaking new ground. The early adopters are slightly different, while accepting new technology ahead of the rest of society, they understand the product may not be fully developed or that there may be shortcoming in support and longevity but expecting the product to be first of a kind, relatively unique in the market place, and offering something different. They do this because they are driven by change, and potentially happy to take a degree of risk. Many of the owners driven by the environmental benefits would fall into this category.
But as we move from the tail end of the Early adopters into the Early majority the decision-making process changes again. Completeness of the product becomes more important, reliability is a factor coupled with robust support, the items are simply expected to work and in a cost effective manner. They still like to adopt change early but their attitude to buying risk is different, they care about the reputation of the company, the supporting services need to be in place, and they are starting to become price sensitive, and in the lack of unique differentiation, they want value. The product needs to do what it says on the tin. They’re looking for degrees of familiarity, they’re not looking at significant change, new products need to add to their lives without taking anything away.
This is especially relevant to EV adoption. It's a bold step change to move away from the known, and it is change. You simply can not map on the finite steps of Petrol ownership to that of EV ownership. To substitute the 5 mins filling a petrol car with charging doesn't work, but then the majority of the time it doesn't need to as home charging means ont he vast majority of days you start with a full tank. But this change in attitude is still change, and people are notorious for pushing back against it.
Hype cycleGartner have mapped many new technologies against what they call the Hype Cycle. This illustrates the various stages of evolution from initial ideas, through an early spike of excitement and into a trough of disillusionment where many of the early ideas fail to deliver for a given class of innovation. This is largely because the technology and innovation world is driven from new technology capabilities while they struggle to find real world applications. The emergence of block chain is a classic example of a technology innovation that continues to struggle with finding any real world applications. Banks have operated currency exchanges for centuries yet Bitcoin is held as the gaming changing technology but other than explaining how it works, few have been able to articulate where you would want to use it. Out of these ashes of disillusionment come the enduring, value adding implementations that are worthwhile, be that where the true value resides from a business case perspective or the failings of the early attempts are addressed and re-prioritised.
Self driving cars are on the initial upward leg to the peak of excitement. The technology of machine learning, improvements in sensor technology, and other techniques have lead to the development of increasing levels of sophistication with respect to cruise control, lane keeping, safety systems and ultimately self driving. But the future models also talk of not needing car ownership, or your car going out to work as an autonomous pseudo Uber while you sit at home. Is this what people want? We've also seen the pitfalls of drivers taking liberties with the technology and the path to adoption is far from straightforward, both technically and legally. And thats before we get into the realms of real world practicalities on country lanes and school children playing chicken by stepping in front of the cars in urban areas. Do I need a car to drive me 3 mins down the road while I have to supervise it? Until the car can be fully responsible with a drunk owner sitting in the back, the beenfit for short journeys seems somewhat limited in the medium term.
Both crossing the chasm and the hype cycle are models and for any given product or technology class, the exact path, pace and success will be different, but we believe the principles are worth considering. They often mirror each other, but both illustrate the difficulty in momentum and the change of mindset from the early stages of the lifecycle to the needs of the later stages.
The Tesla journey across the chasmTo see the journey that Tesla customers need to make, we're going to look at three areas:
- The buying experience
- The ownership experience
- The support experience
The buying experienceInnovators loved the different sales technique. The lack of sales staff who weren't incentivised to sell, just to educate, enable test drives and if you wanted to buy, they'd either let you do it from home, or sit you down at a screen in store and let you fill out the form. In many ways a refreshing approach. The innovators were all over the internet forums and many knew more about the cars that the sales centre staff. They knew the details of a dual motor car over a single version, the usable battery capacity, and so on, and the experience with Tesla was almost collaborative rather than retailer/customer. It was a bold decision to buy a Tesla in the early days and part of the experience for the innovators and early adopters was working out the detail when they recognised few others did. It became a hobby to find out everything there was to know.
These early buyers set up fan sites, dismantled cars, bought into the green credentials, searched planning applications for where new chargers might be installed. They created apps to share home charging locations and more apps to allow fellow owners to notify them if they needed the charge point so they could come back and move their car. It became a mini community, a time-consuming hobby, the focus of their attention for a while.
Their loyalty was rewarded by offering them referral awards should they introduce another buyer. You'd find owners hanging around the sales centres offering their "impartial" advice and praise the virtues of the cars. At supercharger locations they’d sit with their car doors open willing to talk to any curious person and extol the cars virtues. In return you'd be offered branded jackets and carryon luggage, unique alloy wheels or a signed home charger by Musk himself, more ways to show the world that you're at the leading edge of the revolution.
The mission was bold: to change the world. And so it its worth recognising that there is a class of buyer who were driven by the green credentials although we believe those willing to commit to a full EV are innovators and early adopters in green technology, so the underlying arguments still hold true.
Fast forward and the early majority don't want to do the same degree of extensive research to understand the nuances of charging and the changes in their driving behaviours. They short circuit these steps and buy the car with a belief based on the general groundswell of comments that all is well. You can buy the future today, its everything a petrol car is only better. They’d sit in their cars charging, staring at their mobile phones not wanting to make eye contact to strangers let alone engage in yet another conversation on how far it can go on a charge or defend he misplaced belief that the electricity comes from burning coal is not better than burning petrol.
The Tesla family extended further, they let people park their cars at service centres near airports free of charge for the duration of a holiday, they let people have the access codes to the back entrances to motorway service centres so the super chargers were more readily accessible. Nothing was too much trouble.
The referral scheme however fell victim of its own success and a thousand youtubers and forum posters dominate drowning out any balance to the argument as that referral code might just mean a lucrative reward. There is little impartiality with these owners, and the sheer numbers prepared to be vocal is driven if not by these rewards a degree of confirmation bias; I bought the car, and if you do it means I made the right decision. That’s not to say the underlying car isn’t good, it’s the lack of balanced argument and recognition that’s absent from the innovation community. Only those Anti EV or Anti Tesla seem to post the negative and we end up with a polarised set of arguments with no middle ground.
And up to a point, that was not all bad, you were either in or out the camp.
But times are now changing. There's a new segment of owner that is starting to feel the niggles that were over looked before, chinks in the armour are starting to appear. Rather than the majority of owners talking positively, there's an increasing number who raise their valid concerns, and without the referral scheme, even the once positive owners are less inclined to be as vocal, they’re moving onto other topics to satisfy their desire for Innovation. In 2016 you would have been hounded out of the internet forums for being critical, that tide has turned. Oddly, some of the most vocal Tesla supporters today are those who don't actually own one, they’re almost aspirational innovators who can’t fund the purchase but want to align themselves to the ethos, but correspondingly they don't experience the issues. It is actually quite difficult to obtain an objective opinion on the topic. Prospective buyers are now having seeds of doubt planted in their heads and as competitors bring out their own models, staying with a long standing brand satisfies one of the risk areas of ownership, for better for worse, you understand what you get when you buy Jaguar or BMW. Unfortunately Tesla have also shot themselves in the foot over the referral programme by failing to deliver many of the rewards even after 12 months. Those loyal advocates are now feeling slightly bitter they have not received the benefits they were promised. It's not endemic, but the hitherto unwavering support is showing cracks of loyalty.
We’re going to keep away from the general EV transition other than to say charge points have a vast array of different membership schemes and apps., the price to charge when away from home which was once free is increasingly paid for, including Teslas own Superchargers, and the cost is becoming increasingly comparable to that of a Petrol car per mile. The trough of disillusionment of public charging is heading towards its low point against expectation. More electric cars, unreliable networks, parking spaces blocked by petrol cars. The seeds are starting to emerge such as credit card payment, the agreement to standardise on CCS DC charging in Europe, removing free charging which lead to abuse, but these changes take time to build out. Buyers hear these concerns and it creates a seed of doubt, something that you don’t want when spending the vast sums of money being talked about.
But back to the chasm for Tesla. Tesla, to all intents and purposes, do not run a used car operation. Part exchange valuations on any car, including Teslas, are rarely competitive. The sales centres don't carry used stock, and what used inventory there is has to be bought before being seen, at best you can request some pictures.
For the buyer this means you either buy new every time, or you buy without the comfort of main dealer support. And the few used (or certified pre-owned) cars that Tesla sell are now not prepared to any recognised industry standard. You would almost certainly buy a better prepared car from a trusted independent garage than directly from Tesla. While this may be the norm when buying a mobile phone, its a wholey different proposition when spending large sums of money on a car, especailly one where there is already uncertainty around the technology.
For those that lease the picture is slightly better, you return your old car and take delivery of the new one, although the Tesla process is again thwarted with slightly awkward hurdles. You need to reserve the car with a deposit before they’ll confirm you can be given the necessary credit. The details in the paperwork are often slightly ambiguous in areas such as the costs for excess mileage. This can be an uncomfortable change for many buyers.
And not everyone is in the market for a new car, and when buying used cars, the safest option histrionically is from a main dealer with the security they offer, something that just isn’t a meaningful proposition with Tesla.
The ownership experienceWhile wanting to avoid a detailed discussion on some of the general pitfalls of EV ownership, there are some Tesla peculiarities. To their credit the supercharger network is a very beneficial asset. It does aid long distance travel (so long as within reasonable reach) and they have also made owning an EV without home charging, something prevalent in cities like London, a viable proposition. We could discuss queuing issues at the popular locations, the scaling out of the network not keeping pace with the volume of cars on the road, but these would be ignoring the benefit that does exist.
Supercharging is another area however where the benefit given to the innovators of unlimited free supercharging has been whittled away. At one point it was unlimited to the first owner of a car, then it was 400kwh a year, and not its 100% paid for. A double-edged sword, while this will cause a marked reduction in new owners “freeloading” while shopping, it’s an example of the change in the relationship Tesla have with their customers.
One of the biggest ownership issues we have is to do with the Tesla marketing with respect to features. Tesla talk widely about over the air software updates and being able to roll out new features all the time. In theory that sounds like an amazing virtue, however in practice this has led to the majority of releases just fixing issues that were broken in the last software release. The number of new features that have been released is relatively small, they introduced Pin to drive to curb the theft risk many cars have, comfort access where you could remember a different seating position when putting the car in park, and “easter eggs” or silly gimmicks such as a whoopee cushion.
The problem however is their attitude towards paid for features which are under developed, most noticeably Autopilot and full self driving. Irrespective of the merits of its use when used correctly, buyers are still receiving updates to make it deliver on the what they were sold years ago. Each software release changes the behaviour subtly, and while over time the performance has edged higher, each release can require a degree of readjustment. The steering wheel nags seem to change each release, from over baring to almost absent, and as is the nature of machine learning algorithms, while the overall may improve, a corner or a piece of road that used to work fine may stop working, catching a drive unaware. The best example of this is in response to a fatal accident where the system did not see a lorry sideways across the road, the software seemed to be subsequently tweaked and for a period of time the unintended consequence was phantom braking as the car approached some bridges over the road. Braking from 70mph seemingly at random times is not a welcome experience and positively dangerous.
Most car owners accept a period of acclimatisation to a new car, but the majority are not car enthusiasts who want to understand the nuances of ever-changing operation. In the last 3 years Tesla have released 2 fairly major redesigns of the user interface, each requiring a relearning. We also have the issue of software bugs, features like Spotify that has been temperamental at best and could just stop working after a software release and stay like that for several months until a new fix is released.
When owning a car I believe the majority of owners want it to be reliable, consistent, and predictable. Whether its Tesla pushing the battery technology as far as it will go, or the high efficiency of EVs in general leaving nowhere to hide, but the variability in range due to weather is startling, a summer, warm weather range of 220 miles can plummet to 150 or less in winter. Its also unnerving to park a car with 50 miles of range and to return 2 days later and find the car with 20. All EVs do experience this up to a point but with Tesla it seems more noticeable. BMW have taken a different approach and retain some buffer on the battery and they can release this to accommodate some general degradation over time, but also seem to soften the range variability.
The support experienceThe final area is the support experience. Tesla are unique in that they own all the service centres and they don’t operate a franchise model. This gives them total control over the whole process down to support. The only current exception is body shop work where they have approved repairers.
Routine servicing is peculiar, Tesla recommend a service interval of 12500 miles or 12 months, whichever is sooner. This is an unusually frequent service routine given most luxury cars have an interval of nearer 20k miles or 24 months. The Tesla service cost is also surprisingly high at £600-£800 for a vehicle with 1/10 of the moving parts compared to a petrol car, and due to the extent of the electronics is highly self diagnostic. Tesla confusingly also state you do not need to maintain a service history for warranty purposes, we partly suspect his is to avoid issues with block exemption legislation and making their diagnostic equipment and parts supply completely open. We therefore have a surprising paradox that the recommended service interval is more frequent and more expensive than many competitors such as BMW, but is also arguably not needed.
The cars also don’t include a service indicator so there is no way to tell if the car needs servicing other than a warning light and there is no log book to record servicing that has been performed. It’s simply down to the owner to remember with no general push or nag to ensure preventative measures are routinely taken to ensure the car is safe to be on the road.
However, most of the Tesla finance agreements which include returning the car at the end of the period, e.g PCP, make servicing a requirement. How you would demonstrate this without a log book is difficult and relying on Tesla own records is problematic on two fronts, firstly the accuracy as we know from first hand experience they failed to record a service correctly and only agreed to correct the records when we showed them their receipt, and secondly, any suitably garage are allowed to service a car. But it falls to the owner, without any reminders from Tesla or the car, to both remember to get the car serviced and to keep suitable record keeping. In summary we find it very difficult to know what a sensible course of action is. Many owners don’t service their cars at all, some skip services. But if you were in the majority class of buyers, having just spent upwards of £80k in a car, don’t you just want a sensible, reasonable, service interval and cost? We feel this is will be an uncomfortable experience for the majority of owners.
Tesla have a policy of replace not repair, so if you dent a panel, you need a new panel. We've seen arguments used tha aluminium is difficult to repair as a justification for new parts, and while we'd accept that Aluminium body work is harder to repair than steel, its far from impossible. We’ve consequently seen examples of repairs where the quote from an approved body shop has been in excess of £10k, but has subsequently been repaired for less than £1k as quality, but not approved bodyshop. This is in part a function of approved body shops having higher rates to compensate for the additional training and equipment they may need to deal with extensive repairs, but it also reflects the Tesla policy of how repairs should be performed where in more minor situations alternative approaches are viable.
The approved body shop policy of replacing parts also causes delays as Tesla often have long lead times for parts resulting in cars waiting to be fixed, in some cases for several months. Once you factor in expensive loan car fees to cover this duration, its also been knwon for cars to be written off for relatively minor accident damage as the salvage value of the car, the repair costs and the expected hire car fees exceed the cars valuation. The issue with parts availability is also one that also hurts the warranty repair time scales. In early 2019 we hear reports of many cars at service centres waiting for replacement heater units which can take over a month to source and schedule the repair.
The service centres have also been known to struggle with capacity especially in some locations. While an emergency repair like a failed windscreen wiper might be dealt with while you wait, some fixes take a long time to be scheduled. It varies across the different centres, but with the growth of volume that the Model 3 is bringing, as an example Tesla sold more cars in 2018 in the US than they did in all their previous years added together, they need to be doubling capacity annually to stand still.
Aside from the software issues talked about, there are also a number of failures on the cars, rarely do they render the cars undriveable, but are still frequent. These include failing door handles, failing cabin heaters, and failing screens. The heater issue also seems coincidental to a software change. Through the winter of 17/18 there were very few reports of failed heaters, but after a major software update in late 18, the 18/19 winter, one which was mild in the UK compared to the previous year, has seen a massive spike in failures, some estimates put the failure rate as high as 1 in 10 cars.
We could also talk about build quality and the number of issues that some owners have on collection, most typically linked to fit and finish, but annoying just the same.
We believe the expectation today for the majority is the ability to drive in and have a while you wait service and shake down of the car lasting no more than an hour or so, and at a reasonable price. The car should record the service history and advise owners on when the next inspection is due. Both of these things we believe would be easy to implement and would be expected by buyers. Secondly, a more realistic attitude to repairs, and a parts supply chain that could deliver quickly are essential to both avoid extravagant insurance claims and minimise time off the road for cars.
ConclusionWe’ve not tried to look in depth at the barriers to EV adoption and have focused on the Tesla way and the experience, possibly challenge, owners who are familiar with BMW, Mercedes, Audi, Lexus even Honda, Nissan and Ford will experience.
The automotive industry has arguably needed a shake-up. The Tesla way is different, but has it thrown the good away with the bad? We believe they desperately need to address the used car side of the business, they need to scale their service centres and provide better guidance and more realistic pricing to their work and massively improve their parts availability. And finally, they need to do more extensive testing on their software before releasing it into production. The Tesla way lets owners down in many ways, and while there is much good about the products, car buying for the majority is measured as much by what the worst element is, than what the best element is, and without taking heed of some basic hygiene elements, the products will no longer sell themselves, the close relationship Tesla once had with its owners and the loyalty is used to but no longer rewards, will not be enough to cross the chasm.
We can summarise in a different way. Decide how you want to differentiate from your competitors, be excellent and innovative in those areas, but in everything else, be as good as them. Don't be different for the sake of being different.
About tesla-info.comWe are Tesla owners and in general supporters. We don't hold stock in Tesla, nor do we short Tesla stock. Our views are our own, based on data points and research that we conduct ourselves. Our goal is to take an impartial view as far too many organisations are either extremely pro or anti Tesla.