Price cuts, service investments boost Tesla customer loyalty

A tesla model 3 is being charged at a charging station.

Ahead of Tesla’s Q2 2023 earning results, on July 19, the electric vehicle company revealed it set a deliveries record in Q2. Price cuts (down 16% from January + $7,500 federal tax credits) are most likely behind the demand increases, although we have also seen customers be much happier with Tesla’s service department and associates recently. It appears investments in both are paying off!

In our auto industry update, we look at more than 80,000 pieces of customer feedback across 44 auto brands over the last year to find the following:

Key Takeaways

Tesla’s experiment with prices to drive demand seems to be working, with customers feeling more loyal to Tesla after it slashed prices and confirmed a $7,500 federal tax rebate. Tesla’s Loyalty Intent^1,2 increased over the past month (+6%), as did customer net sentiment³ toward Price (+12%).
Tesla’s investments in employees and its retail and service locations also appear to be paying off. Tesla customers feel significantly happier about Tesla’s service department and the attitude and knowledge of its employees. Net sentiment toward both increased significantly (10% and 12% respectively) over the past month.
Tesla’s Loyalty Intent jump outpaced the pickup in broader electric and hybrid vehicles (+2% the last three months). Electric / hybrid vehicles was the only category across our broader auto industry coverage to see a pickup the last three months.
Our proprietary, AI-driven Resource Allocation model indicates Tesla should invest in associate attitude and knowledge, the cost of owning its vehicles and its service departments to drive future loyalty and market share gains.

Discover HundredX insights into Auto Trends:

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Over the past month, Loyalty Intent increased the most (+6%) for Tesla, surging more than the industry (-1% overall) in June on the back of price cuts and tax credits. Tesla Loyalty Intent is the highest it’s been in more than a year. Ford’s Loyalty Intent dropped 4% the last 2 months, ahead of electric F150 price cuts announced July 17.

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Industry-wide, over the last three months, electric and hybrid vehicles are the only category to see gains in loyalty Intent (+2%), continuing its outperformance all year. Tesla’s 6% Loyalty Intent increase outpaces the broader increase in electric and hybrid vehicles.

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Older adults are driving Tesla’s recent Loyalty Intent gain, increasing 9% for customers over 50 in June vs. declines for younger age groups. Loyalty Intent for customers over 50 shrank 1% from May to June for the overall auto industry.

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Wealthy customers are also driving Tesla’s recent Loyalty Intent gain, up 8% for customers in households making more than $200,000 annually. Despite Tesla’s pricing initiatives, Loyalty Intent surprisingly dropped 6% for customers making less than $100,000 annually.

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Tesla’s pricing initiatives helped sentiment and volumes in June. While Tesla customers continue to dislike the prices more than other companies, they feel much better than a month ago (net sentiment +12% in June).

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Gains in net sentiment toward Tesla's service department (+10%) and the attitude and knowledge of its employees (+12%) over the past month likely also played a significant role in Loyalty Intent gains. Tesla’s increased spending on employees and focus on its retail and service locations appears to be paying off.

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Please contact our team for a deeper look at HundredX's auto data, which includes more than 215,000 pieces of customer feedback across more than 40 auto brands.

All metrics presented, including Net Loyalty Intent (Loyalty Intent), and Net Sentiment / Net Positive Percent are presented on a trailing three-month basis unless otherwise noted.
Loyalty intent reflects the percentage of customers who plan to purchase a specific car brand again minus the percentage who plan to switch to a new one. We find businesses that see customer Intent trends gain versus the industry have often seen revenue growth rates, margins and/or market share also improve versus peers.
HundredX measures net sentiment towards a driver of customer satisfaction as the percentage of customers who view a factor as a positive (reason they liked the products, people, or experiences) minus the percentage who see the same factor as a negative.

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HundredX works with a variety of companies and their investors to answer some of the most important strategy questions in business:

Where are customers "migrating"?
What are they saying they will use more of in the next 12 months?
What are the key drivers of their purchase decisions and financial outcomes?

Current clients see immediate benefits across multiple areas including strategy, finance, operations, pricing, investing, and marketing.

Our insights enable business leaders to define and identify specific drivers and decisions enabling them to grow their market share.

Please contact our team to learn more about which businesses across 75 industries are best positioned with customers and the decisions you can make to grow your brand’s market share.

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HundredX is a mission-based data and insights provider. HundredX does not make investment recommendations. However, we believe in the wisdom of the crowd to inform the outlook for businesses and industries. For more info on specific drivers of customer satisfaction, other companies within 75+ other industries we cover, or if you'd like to learn more about using Data for Good, please reach out: https://hundredx.com/contact.

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