Published on February 1st, 2019 | by Kyle Field0
Tesla & Elon Musk’s #1 Priority For 1st Quarter Is Improving Service
February 1st, 2019 by Kyle Field
Tesla is refocusing on service as its top priority now that it has stabilized production and delivery for Model 3, CEO Elon Musk said yesterday on the company’s Q4 2018 earnings call. Elon said on the call, “One of our major priorities for this quarter is improving service operations,” with a specific focus on North America, which is home to the majority of Tesla’s vehicles.
Elon talked through a scenario where parts sourced from China were shipped across the world and back before being sent to a customer based in China, noting the inefficiencies and added expense of the company’s current parts supply chain. “We’ve just been super dumb,” he said about the current process. The statement is more of a reflection of the realities of growing a company from several hundred employees to more than 40,000 in the course of just a few short years, and from 2,400 vehicle sales in Q4 2012 to 90,700 vehicle sales in Q4 2018.
The startup culture works, and delivers results, but that culture comes at a cost when the speed and risk tolerance is scaled up to a global corporation with several hundred thousand vehicles roaming the highways of the world. Inefficiencies in the parts supply chain is one of those and has resulted in long wait times for vehicle repairs, often due to unpredictable lead times for parts.
Elon noted that in addition to a logical approach to the parts supply chain leading up to a customer, they had identified opportunities to improve the locations where parts are stored around the world. “We’ve just been really silly about where we store our parts,” he said. “It’s just about being smarter about sending parts directly to service centers.”
Doubling Down On Mobile Service
Customer feedback on Tesla’s mobile service fleet continues to reinforce Tesla’s belief that the only thing better than good service at a service center is fixing a customer’s car from the convenience of their home or office. This feedback has been heard loud and clear, according to Elon, who said on the earnings call that, “it’s really seamless and invisible and customers love it.”
Imagine being at work when a text comes in that the service tech is approaching your workplace. You walk out, sign a paper, hand over the key, and she immediately gets to work on the problem. A few minutes or hours later, another text comes in that work is wrapping up. You come out to the parking spot to sign another paper and pick up your key.
Compare that to the experience at a traditional automotive dealership. Not only do you have to physically drive to the dealership and drop off the car, but you have to wait there while it is serviced or get shuttled back home or to work. It’s not the end of the world, but Tesla’s model is a significant improvement over the charred coffee and elevator music that awaits at a traditional automotive dealership.
To this end, Tesla has increased its fleet of mobile service vehicles to 411 vehicles at the end of Q4 2018. The mobile service continues to receive higher customer satisfaction than traditional service arrangements, and the fact that it is allows Tesla to expand its service coverage area without having to build new service centers means a more efficient use of capital, so why not?
Schedule Service From The Tesla App
Tesla has even added the capability to schedule a service appointment to the mobile app to make the occasional service request that much easier. Why speak to a human when you can do everything you need to do from an app?
Scheduling service starts with a list of the top service requests, which also reveals what customers are having issues with that need some TLC from Tesla. It’s a step in the right direction that makes the occasional service request that much easier, takes a few minutes less time, and works just a little bit better than the normal way.
Elon broke news on the earnings call that Tesla is even working to eliminate the need to request service by having the car do it for you. He shared that when the car determines it needs service, it will create a request for a tow truck and a service loaner automatically. “Before the car even comes to a halt, there is a tow truck and service loaner on the way,” he said on the conference call.
Customers will have the option to cancel the automated request, but this is another example of Tesla thinking and acting much more like a software company than an automotive company. If the car is connected and knows that something is wrong that requires service, why not have it just schedule service, call a tow truck, and request a service loaner? Anyone with a Tesla knows you’ll quickly see the notice pop up on the touchscreen and it’ll be easy to click a large button to cancel the request if it turns out you don’t need it.
It sounds like a dream to me, but it also feels like a delicate balance to strike. Nobody wants tons of requests for tow trucks and service loaners being sent out by an automated system that’s not tuned just right. But that shouldn’t be too hard to nip in the bud, and surely isn’t as challenging as developing a completely new autonomous driving system (including the freaking computer powering it all).
More Service Centers
Increasing its fleet of mobile service vehicles does not translate to eliminating the need for service centers. As Tesla continues its quest for global automotive dominance, the company continues to build more service centers as hubs for larger service tasks. Tesla opened 27 new store and service locations in Q4 2018, bringing the total number of locations worldwide up to 378.
Tesla is also increasing the capability of its service centers to better meet the needs of customers. “It’s going to make sense for our service centers to do basic bodywork,” Elon said. He noted that they are exploring the possibility of stocking some of the more common parts, like front and rear fascias, in factory colors to allow for replacements to be performed in a matter of minutes, rather than days. There’s more to bodywork than just plug and play, so maybe the process will have to be a bit more involved to deliver Tesla quality for things like color matching, but it is exciting to see the company pushing boundaries to strike the best balance of time, cost, and quality for customers when it comes to service.
For customers who need service at a service center but can’t be bothered with actually driving in, Tesla has a solution for that as well. “If you prefer not to come into the service center at all, you can request the car to be picked up and delivered,” Elon said. This is something I used with my Model S when Tesla staff detected an issue with a switch buried in the battery pack that they weren’t thrilled with.
They came out to my workplace in a loaner, swapped keys with me, and were on their way. A few hours later, the reverse happened and all was well in the world. The approach is such a stark contrast to service from a traditional automotive dealership that it brings a smile to my face just thinking about it. That’s like getting exited about going to the dentist. It just doesn’t happen. Until now. Until Tesla.
Higher-Quality, Longer-Lasting Vehicles
The only thing better than good service is building cars that don’t break down or require service at all, and Tesla is pushing that angle as well. Tesla’s President of Automotive, Jerome Guillen, said, “Our manufacturing keeps improving quarter over quarter … actually, week over week.”
That work is already translating to fewer issues requiring attention from a service center. “The quality in the field, the number of incidents, keeps improving week over week,” Jerome said. “We will try to make sure that the car never breaks down,” which will be even more important as the world transitions to fully autonomous vehicles that will run around the cities of the world at all hours of the day and night.
Have a read of our live blog summary of the Tesla Q4 2018 call (and letter) or head over to Tesla’s Investor Relations site to read Tesla’s Q4 2018 earnings letter and listen to the webcast recording for more juicy details from an exciting quarter for Tesla.