Elon Musk puts aggressive growth ahead of customer service. It may come back to bite him.
Elon Musk's companies appear to struggle with customer service.
- Poor customer service could tarnish
Teslaand Starlink's reputation and growth over time, experts say.
For years, Elon Musk has poured resources into aggressive growth and dazzling new products from his slew of companies. The strategy seems to be paying off: Tesla is worth nearly $1 trillion,
But as Musk's many ventures boom, complaints about poor customer service could threaten their rise. In interviews with Insider, customers of Tesla's car business, its solar division, and SpaceX's Starlink satellite internet service say they're frustrated with the way they've been treated during the order process or after they've bought a product.
Experts told Insider that these complaints, including opaque delivery timing, difficulty getting a customer service representative on the phone, and long wait times for crucial repairs could tarnish the companies' reputation with consumers.
Tesla owners say they struggle with deliveries and repairs
Tesla is selling more cars than ever — it sold nearly 1 million vehicles in 2021, more than double the previous year — but it hasn't built out its network of service centers at the same pace, according to regulatory filings. That imbalance has left some owners dismayed by what they have described as long waits for repairs and shoddy customer service.
Tesla owns and operates its service centers, rather than following the conventional franchised dealership model. Opening and running these locations is expensive, and Tesla hasn't grown its service infrastructure to keep pace with its ballooning fleet of vehicles, Sam Abuelsamid, principal e-mobility analyst at Guidehouse Insights, told Insider. Instead, it has focused on churning out as many cars as possible.
"Clearly they made the decision to sacrifice making investments in the service operations and focus on maximizing revenue," Abuelsamid said.
Tesla has 149 service centers in the US, concentrated along the coasts. Fifteen states don't have a single service location. Ford, by comparison, has more than 3,000 dealerships that buyers can turn to for repairs and maintenance. Tesla has tried to make up the difference by building a fleet of over 1,280 mobile service vehicles globally, per its most recent quarterly update. The company can remotely diagnose issues and dispatch technicians to perform some repairs in an owner's driveway.
To be sure, many owners are satisfied with the level of service they receive, according to interviews and social media posts.
But Tesla's service experience has degraded in recent years as Tesla's vehicles age and even more hit the road, Abuelsamid said. That's a liability for Tesla as it moves beyond the early adopter crowd and toward more mainstream buyers, he said.
Tesla owners regularly take to social media to gripe about long wait times for service appointments, last-minute cancellations, a lack of loaner cars, delivery delays, and generally unpleasant customer service experiences. These aren't new problems. A 2019 Bernstein survey of Tesla owners identified service and customer service as weak spots. A Bloomberg survey from the same year saw discontent with initial service appointments on the rise.
Tesla did not return Insider's request for comment, but Musk has acknowledged the need to expand Tesla's service operations, saying in 2018 that Tesla would work to cover all regions of North America "within 3 to 6 months." In August, he said Tesla would expedite the rollout of new locations.
Tesla Energy customers get 'ghosted'
Tesla's solar power division also seems to have a big problem with customer service.
In May last year, 14 home solar customers told Insider they were "ghosted" by Tesla's representatives who didn't respond to repeated calls and emails. Some of those customers had signed up for Tesla's flagship Solar Roof product, which tiles a roof with photovoltaic tiles rather than bolting solar cells on top of an existing roof.
Customers said they had trouble reaching Tesla representatives to discuss unexpected increases to their solar roof installation costs.
Two former Tesla Energy employees told Insider the company had staff dedicated to searching for customer complaints on social media. One of the former employees said that complaining on social media was sometimes a faster route for customers to get their case noticed by Tesla, compared to going through customer service.
One Tesla Solar Roof customer told Insider they were advised by their Tesla project manager to post their complaints online.
"She told me to go online and complain ... on Twitter or Facebook, because she said the only thing this company listens to is social media sentiment," the customer said.
SpaceX's Starlink keeps preorder customers guessing, some say
Starlink, SpaceX's satellite internet, has boomed since its beta launch in October 2020.
Despite its rapid growth, the company's service team appears to be lacking, according to preorder customers who spoke to Insider.
Insider previously reported some Starlink customers had become frustrated because there was no way of contacting customer service to check when they'd receive the internet kit months after paying a $100 deposit. Some said they requested and received a refund for the deposit due to the issue.
John Byrne, a telecommunications analyst at GlobalData, told Insider that in comparison to other internet providers, Starlink "appears to have placed the technology first and customer service second."
Customer service is better for those who have received the kit and are actively using the network, he said.
The only update waiting preorder customers received from Starlink was an emailed apology in November for silicon shortages slowing down the company's production rate and delaying orders.
Starlink sent one email update to customers on the preorder wait list in November 2021, months after many had paid their deposits. The update apologized for silicon shortages that it said was slowing down production and delaying orders.
Although these customers don't need the same level of customer service as the active users, "it's not good form to take a deposit and then leave someone in limbo for that long if they eventually want to attract a broader base of customers," Byrne said.
Musk's charisma can only get his companies so far
Tesla is currently in a "honeymoon period" thanks to its strong branding — but that will fade as the company grows, Iliya Rybchin, partner at the management consulting firm Elixrr which has previously worked with Tesla, told Insider
"Customers are willing to overlook some issues because they expect some challenges with an innovative, ground-breaking startup run by a quirky iconoclast," said Rybchin. "However, over the long-term, these issues compound and unless there is a noticeable change, they will have enormous implications on Tesla's growth aspirations."
Musk's public profile is a double-edged sword, Rybchin added.
"Getting bad service from an old telco is kinda expected and nobody notices those complaints, but get bad service from an Elon Musk company and people are quick to post about it all over Twitter," he said.
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