Coming right on the heels of the landmark announcement that Tesla had “done it,” the company had created a fully electric family car for a middle-class budget, Tesla was forced to admit production wasn’t quite where they wanted it to be. As it turned out, they were way behind, but they were still taking pre-orders.
The company asked anxious customers to be patient, that they would solve their production problems. Now, it seems, they have. But it’s too little too late for some, apparently. Several media outlets are reporting that pre order cancellations have increased in recent weeks, and, worse, there have been more refunds than deposits lately.
What was the tipping point for Tesla? Some analysts believe it was because they didn’t get enough cars out to customers in time for said customers to take advantage of a hefty $7,500 tax credit. That tax incentive has now expired, and consumers can’t even buy the lowest priced Model 3 yet. So, the combination of losing the rebate and not being able to get the more affordable version of the car have combined to become a deal breaker for many customers.
How many orders are being canceled? As many as one-in-four, by some reports. Not a good development for a company that has already faced a string of difficult PR scenarios.
Speaking to the media, a Tesla representative denied that cancellations exceed the new orders coming in, but, so far, media sources are not retracting that element of the story. As for direct to consumer communication, Tesla is telling buyers fulfillment could take between one and nine months. That’s quite a window, and it’s tough to sell with enthusiasm.
For Tesla, it’s possible some of the bloom may have fallen off the rose. Sales of the upscale Model S and Model X have been described as underwhelming, and the automaker is facing stiff competition from a reinvigorated luxury market.
So… if the novelty of an electric machine is wearing off, Tesla will have to shift to targeted PR to re-energize its brand. The company needs good news, and it needs happy customers, and it needs both very soon. Unfortunately, projections say there will be more bad news for Tesla before the year is done. The company is not expected to hit its much-promoted target of delivering 100,000 units by year’s end. To get there, they would need to engineer a massive increase in sales over the final five months of the year. It’s possible, but it will take a good dose of Tesla magic.
Customers want to be amazed and astounded by the new tech, and they want to be surprised at how accessible it actually is. Tesla built its brand by doing those things consistently and doing them well. They got people interested, now they just have to deliver. At the moment, that’s not going too well.
Ronn Torossian is the CEO and Founder of 5W Public Relations.
