Bumpy summer tests brand loyalty for Tesla

Keith Laing
Detroit News Washington Bureau

Washington — Tesla is trying to steer through a tumultuous summer that has seen its brand associated with what’s believed to be the first fatality in a car driving in semi-autonomous mode.

The company has faced questions about its Autopilot system since 40-year-old Joshua Brown was killed in a May crash. His 2015 Model S was operating with the driver-assist system engaged.

Tesla has also been scrutinized for its planned acquisition of SolarCity, which some analysts say is causing the electric-car maker to take its eye off its main task of making cars. This month, Tesla reported worse-than-expected earnings and missed production targets.

Akshay Anand, analyst for Kelley Blue Book, said the rocky summer is unlikely to dent Tesla’s image for its most fervent fans.

“Tesla’s a very, very resilient brand,” he said. “We know consumers see Tesla as sort of more than an automotive brand. It’s almost like a lifestyle thing for them. Traffic on our site for the Model S is off the chart compared to other electric vehicles.”

The fatal crash being investigated by federal regulators occurred when a semi-trailer turned left in front of the car that was in Autopilot mode. Florida police said the roof of the car struck the underside of the trailer and the car passed beneath. Brown was declared dead at the scene.

“Neither Autopilot nor the driver noticed the white side of the tractor-trailer against a brightly lit sky, so the brake was not applied,” Tesla said in a blog posting on June 30.

Tesla has defended its Autopilot system, and the company has maintained that demand for its vehicles is still strong.

“Q2 was certainly busy,” Tesla’s CEO Elon Musk and Chief Financial Officer Jason Wheeler said in a second-quarter update that was provided to Tesla investors. “We completed the design phase of Model 3, increased vehicle production by another 18 percent sequentially, rolled out the biggest aesthetic and functional update to Model S since its initial launch, introduced an upgradeable 60 kWh Model S, increased automotive gross margin excluding ZEV credits, and completed a $1.7 billion equity raise to end the quarter with $3.25 billion in cash.”

Tesla told investors it delivered 9,764 Model S and 4,638 Model X vehicles in the second quarter of 2016, down from a previous projection that 17,000 autos would be delivered during the period.

However, the company predicted “production and demand are on track to support deliveries of approximately 50,000 new Model S and Model X vehicles during the second half of 2016.”

Ardent fans linger

Researchers at said the percentage of visitors to the car-shopping website who reviewed information about pricing, reviews, specifications or photos of Tesla’s Model S — compared to visitors who viewed such content about similar vehicles — declined from about 25 percent in late June to about 18 percent in early July, as news of Brown’s death was confirmed by federal regulators.

The website said searches for information about Tesla’s Model X compared to similar cars remained steady at about 28 percent during the same period. spokesman Aaron Lewis said in an email that “news stories generally affect Tesla consideration on our site more than any other brand because the company just has so much buzz behind it. So, both positive and negative stories will drive interest in Tesla on our site.”

He added: “But just because consideration is high, it doesn't mean that shoppers are more likely to buy the vehicle. Likewise, if consideration is down, it doesn't mean that shoppers are less likely to buy.”

Tesla’s most ardent fans have stood by the company amid the Autopilot controversy. They have criticized consumer groups that have used the crash that caused Brown’s death to push federal regulators to pump the brakes on fully testing autonomous vehicles.

“Tesla is not to blame and should be encouraged to further develop the technology and not remove it,” a user going by the screen name jlocke wrote on the message board on Tesla’s website. “Keep going Tesla, love my Model S and Autopilot features are amazing and improving every day.”

Autopilot under fire

Consumer and safety advocacy groups have accused Tesla of falsely promoting the Autopilot system as a self-driving feature. They have pushed federal regulators to force Tesla to stop advertising the system as an autopilot.

“Tesla wants to have it both ways, hyping the image of Autopilot as self-sufficient, but walking back any promise of safety by saying drivers must pay attention all the time,” the Center For Auto Safety, Consumers for Auto Reliability and Safety, Consumer Watchdog and Public Citizen said in a letter to President Barack Obama. “By releasing Autopilot prematurely in beta mode, Tesla is unconscionably using our public highways as a test lab and its customers as human guinea pigs.”

Tesla has said it disables Autopilot by default and requires explicit acknowledgment that the system is new technology and still in a public beta phase before it can be enabled.

The company notes that drivers are also reminded they “need to maintain control and responsibility for your vehicle” when the Autopilot system is launched.

Anand, the analyst for Kelley Blue Book, said accidents involving Tesla vehicles are more likely to receive attention than other manufacturers’ models because of the company’s marketing campaigns that have highlighted its Autopilot feature.

“Toyotas and Hondas are involved in crashes every day, but you don’t hear about them,” he said. “You hear about every Tesla crash, and I think that’s going to continue because Tesla has branded its driver-assist as an autopilot. If this was called the Tesla Enhanced Driving Suite, I don’t think it would cause the same reaction.”

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Twitter: @Keith_Laing