Tesla Motors Inc (TSLA): Do Continuous Updates Mean Disappointment?

Tesla Motors Inc (TSLA): Do Continuous Updates Mean Disappointment?
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Since Tesla Motors Inc (NASDAQ:TSLA) Model S sedans leaped into the spotlight about a year ago, customers who have purchased them have had nothing but good things to say about them. The Model S has won awards and accolades and has struck fear in dealerships because people buy the cars directly from Tesla instead of through a dealership. However, Forbes contributor Steve Blank believes Tesla will end up disappointing customers in the long run.

Tesla touts continuous improvement

One of the features Tesla Motors Inc (NASDAQ:TSLA) touts is the continuous improvement of its vehicles. The automaker rolls out software improvements almost all the time through its over-the-air program. It also doesn’t differentiate between model years because improvements are being made every quarter right at the assembly line. This means that the cars rolled out on one day may suddenly be much better than the cars rolled out a month before.

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Do people just want shiny new objects?

While this sounds pretty good, Blank suggests that customers prefer shiny new objects every year rather than the continuous improvement offered by Tesla. He might be on to something here because clearly this is something Apple Inc. (NASDAQ:AAPL) understands. Fans continue to flock to the company to buy its shiny new iPhone models every year even though often there isn’t much to differentiate one year’s model from another.

However, there’s no denying that Tesla is different than Apple. While people may be inclined to buy a new phone every year, cars are an altogether different story. Most people won’t buy a car every year. As a result, the thought of getting new features all the time through software updates could appeal to consumers’ desires for something new constantly.

Where Tesla could run into problems

Blank does note that the fact that Tesla Motors Inc (NASDAQ:TSLA) changes its cars each quarter rather than setting different model years could create a problem in the eyes of some consumers. He said no automaker has done this since Ford Motor Company (NYSE:F) manufactured the Model T back in the early days of the auto industry.

Since Tesla changes the hardware of the Model S every quarter, Blank suggests that consumers feel like they deserve the physical upgrades to their Model S—even though they bought theirs earlier when these features or technology were not available. And also if their cars are not compatible with these updates. He thinks they might be disappointed because, realistically, this isn’t something Tesla can do. Sending out software updates is one thing, but updating the physical features of a car is something else entirely.

Consumers want control

Blank also considers what might happen if Tesla Motors Inc (NASDAQ:TSLA) rolls out a software upgrade that consumers don’t like. They have no control over this change, which happens automatically. You may remember that last year when Apple Inc. (NASDAQ:AAPL) forced iOS 7 updates on older iPhone users, many were understandably upset, particularly because of all the bugs in the early days. One customer even filed a lawsuit over the issue because Apple not only forced the iOS 7 update but also made it impossible to revert back to iOS 6.

However, Apple continued to update iOS 7 and fix the bugs. Now we don’t hear much about people complaining. There’s a chance that if Tesla does roll out a software update people don’t like, we could see something similar happen. But as long as the automaker fixes the things people don’t like, I don’t see why customers should be disappointed in the long term.

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