Reliability is $35,000 Question For Tesla Model 3

CARS.COM — The Tesla Model S luxury car has its share of reliability gremlins; will the more affordable, $35,000 Model 3, coming in late 2017, have similar problems? The California automaker claims it’s making strides in both service and reliability, but experts say the automaker needs to make good on those with its latest car: Model 3 buyers may not take so kindly to slip-ups.

Related: Reservations for Tesla Model 3 Top 325,000, But Questions Remain

Tesla’s reliability record is a complicated matter. For one, the automaker’s volume is relatively low. Tesla has sold 68,581 Model S sedans in the U.S. in its roughly four years on the market, according to a sales estimate through March 2016 from electric-car blog InsideEVs.com. (Tesla doesn’t report monthly U.S. sales.) That’s impressive for an electric car, but it’s still a small number. Many popular family cars sell that many over just a few months. The result, when it comes to gauging owner-reported reliability, is that Tesla’s sample sizes are small.

Then there’s the difference between owner-reported problems and owner-reported satisfaction. There seems to be little correlation. Consumer Reports says some 97 percent of the 1,400 Model S owners who responded to its reliability survey say they would buy it again, despite reported problems that range from general squeaks and rattles to inoperable wipers and door handles or trunk- and wheel-alignment issues.

“We’ve previously discussed where we’ve had issues with reliability,” Tesla told Cars.com in an email. But the automaker also claims “dramatic improvements,” saying first-year repair claims went down 75 percent between 2012 and 2015.

And owner satisfaction is sky-high. Ed Kim, vice president of industry analysis at AutoPacific, said about 95 percent people who own a high-end luxury car rate reliability and dependability as a 4 or 5 on a 5-point scale in AutoPacific’s data. But a staggering 100 percent of Model S owners give their cars those marks. It’s a small sample size — just 86 Model S owners — but still “just insane,” Kim told us. “We never see that kind of unanimous love with a robust sample size.”

He doesn’t buy it. The Model S owner “is so excited about the technology and has other cars in the household that he or she can [also] depend on,” Kim said. “They sort of see themselves as beta testers.”

And that affects these scores. “Enthusiasm about the car is coloring their satisfaction ratings,” Kim added. “Certainly, the data do not likely reflect actual perfect reliability.”

Indeed, Consumer Reports notes that in the car’s five model years on the market, owner-reported reliability has been subpar.

The newer Tesla Model X crossover also is not without problems. Tesla recalled it on April 11 for a faulty third-row seat that could fall forward in a crash.

“If the quality issues that people have talked about get louder, that could impact things” for the Model 3, IHS Automotive senior analyst Stephanie Brinley said.

Why? Because, according to Kim, buyers of the more mainstream Model 3 may not cut Tesla as much slack as Model S luxury car owners.

“Your $35,000 customer is not going to be that way,” Kim said. “That’s going to be a much more mainstream customer that’s much more accustomed to everything working like it’s supposed to — functioning like it’s supposed to, starting on the first try.”

Tesla says it will bolster its network of free-for-owners charging stations and its recently announced roadside-assistance towing of up to 500 miles to the nearest dealership. And over-the-air updates of cars’ software enable the automaker “to diagnose and fix most bugs without the need to come in for service,” Tesla said. The Model 3 will also receive over-the-air updates, but Tesla said it’s still determining other specifics of the ownership experience.

As the car arrives, Kim thinks Tesla will need to commit huge resources to the service side.

“As much as Tesla is pouring resources into finishing (research and development) of the car, they better be pouring resources into the retail and service side as well, because without being able to offer a retail and service experience comparable to that of other $30,000 and $40,000 cars, they will have a lot of upset customers,” he said.

“This is going to be so crucial to the overall success of the car,” Kim added. “I would dare say it’s just as important as the car itself.”