Elon Musk made Tesla a success despite ignoring the golden rule that his rivals have been obsessed with for decades – Markets Insider

Tesla CEO Elon Musk's ability to captivate potential customers has helped drive the electric-car maker's growth.

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In the past 50 years, automakers have had little hope of breaking into the US market if they couldn't master the basics of manufacturing. As they took market share from GM, Ford, and Chrysler in the 1970s, Toyota and Honda built reputations on cars that were more reliable than American ones. Bob Lutz, a former GM, Ford, and Chrysler executive, told Insider that forced Detroit to reevaluate how it built cars. "We instituted all of the Toyota production system methodology," he said.

Meanwhile, foreign brands that struggled with quality and reliability, like Yugo, Renault, and Sterling, struggled to establish footholds in the US, Dave Sargent, who oversees JD Power's vehicle quality research, told Insider. Hyundai's turnaround in the US came only after it began offering a 100,000-mile warranty, a signal it had fixed its quality issues.

But Tesla, the latest automaker to find consistent success in the US, has bucked the trend by proving that poor quality and reliability won't necessarily scare off customers. The electric-car maker has long rejected many of the ideas behind Toyota's production philosophy, at times relying too heavily on automation or rushing through inspections to boost output. For years, Tesla has lagged its rivals in quality and reliability surveys from JD Power and Consumer Reports.

Yet Tesla has consistently grown sales, while earning industry-leading owner-satisfaction scores. Since 2016, the company has topped Consumer Reports' ranking of automotive brands with the happiest customers. While other automakers have found success with poorly built models, none has done so as consistently as Tesla has, said Ed Kim, AutoPacific's vice president of industry analysis.

Tesla has overcome the auto industry's conventional wisdom that quality is king with cutting-edge technology and by inspiring intense loyalty. The company pioneered features like wireless updates, large screens that controlled many settings, and Autopilot, the driver-assistance system that can navigate city streets (with mixed results, according to YouTube videos and professional testers).

Customers have praised those features, as well as more traditional measures of driving performance, like acceleration and handling.

Tesla also has strong intangible assets, like the enthusiasm generated by its bold and controversial CEO. Elon Musk has said he cares more about promoting clean energy than maximizing Tesla's profits. And so to some customers, a Tesla is more than a car. It's an opportunity to promote technological progress and a healthier planet. "It's like Elon says: If you're buying a gasoline car in this day and age, it's like buying a horse when cars became available," a Tesla customer told Insider in 2019.

The question is whether Tesla can count on that sentiment in the long run. Consumers may not be as accommodating of Tesla's flaws as a wider variety of EVs become available in the coming years, Kim and Sargent said, but similar predictions have proven wrong before. Electric models from competitors like Audi, Jaguar, and Chevrolet haven't halted Tesla's growth.

And Tesla customers may have fewer problems to deal with going forward. While Tesla performed poorly in JD Power's most recent dependability study, it has made significant improvements in build quality in recent years, Sandy Munro, whose consulting firm has disassembled and examined multiple Tesla vehicles, told Insider. Whether that trend continues might not matter if the company can retain Musk and continue leading the way in automotive technology.

Are you a current or former Tesla employee? Do you have a news tip or opinion you'd like to share? Contact this reporter at mmatousek@insider.com, on Signal at 646-768-4712, or via his encrypted email address mmatousek@protonmail.com.

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Elon Musk made Tesla a success despite ignoring the golden rule that his rivals have been obsessed with for decades - Markets Insider