TSLA Tesla Inc

By Mike Ramsey 

Anne Carter had her Tesla Motors Inc. Model X sport-utility vehicle for a few days before the $138,000 electric vehicle suffered a mechanical malfunction.

On a recent morning, the car's falcon-wing doors wouldn't open as she prepared to drive her children's carpool to school. "It's a bummer; you spent all this money...and the doors won't open," she said in an interview while waiting for the Model X to be picked up for repairs. She expected some issues, but feels embarrassed that friends might think: "Look at the Carters -- they spent all this money and the doors don't work."

It is a very critical time for the pioneering electric-car maker. Its well-to-do customers are confronting not only problems with the Model X's rear doors but other issues, including a seat latch, the company has recalled. Whether the Palo Alto, Calif., company can quickly resolve these new-model glitches and avoid them in the future will be key to proving it can deliver vehicles in high volumes without a hiccup.

Tesla says it is quickly addressing its manufacturing problems. And improving its ability to bring high-quality vehicles to market is a priority for Chief Executive Elon Musk. Senior executives are meeting weekly with personnel from engineering and manufacturing to ensure a smooth launch next year of its first affordable car, the Model 3.

Earlier this month, Tesla recalled 2,700 Model X cars to fix a third-row seat latch that could come undone and allow the seat to fold forward during a collision. The company has advised owners to keep passengers from that row until repairs are made and is providing loaner vehicles to some.

The company's reputation has suffered. Online forums, Facebook groups and auto reviewers and competitors point to the Model X's problems as a reason to be skeptical about the company's plan to ramp up its output. Tesla aims to build 500,000 vehicles a year by 2020, most of which will be the Model 3, a sedan intended to compete with mass-market brands like Chevrolet.

The company's car deliveries -- a metric closely watched by investors and analysts -- fell short of the first quarter goal by 1,200 units, or nearly 10%. Parts shortages were partially to blame, but so were sourcing changes that came late in production planning. Tesla took the rare move bringing the manufacture of middle seats in-house not long before the car's launch.

Jon McNeill, Tesla's president of sales and service, said the company is rapidly responding to issues, many of which have been addressed through a software fix downloaded to customers through over-the-air updates.

"The customer satisfaction levels for owners of the Model X are about the same as the Model S," Mr. McNeill said, referring to the sedan that Tesla launched in 2012. The falcon-wing door problems "are largely behind us."

Some owners are still waiting for repairs.

Brad Ledwith, a financial adviser from Morgan Hill, Calif., got his Model X on the last day of March and loved it, immediately hitting the highway and trying out new features. When the falcon wing doors gave out only a few days later, he at first thought his children were to blame.

After learning the problem was related to manufacturing glitches, Mr. Ledwith called his local showroom, but Tesla's service outlet was overloaded with repair orders. It would be two weeks before the car could be fixed, he was told.

"I think to myself, I am willing to concede a couple of things, but it is just I'm leasing this car for $1,350 per month," said Mr. Ledwith, a former BMW X5 owner. "If it is out two weeks, that costs $700."

Tesla rented a Chrysler Town & Country for Mr. Ledwith.

Ms. Carter, also the recipient of a rental, is grateful for the customer care but hopes Tesla doesn't replicate that offer with the cheaper and higher-volume Model 3. "They better not offer that," she said. "I want to be getting something for paying so much for my car."

It will be years until the Model X's longer term quality is well documented, but its predecessor, the Model S, has had a bumpy road. Consumer Reports last year pulled its recommendation for the Model S because of reliability problems even though reviewers loved driving the car so much they initially gave it the highest score ever.

Mark Rechtin, a Consumer Reports editor, said the product review magazine recommends avoiding new cars in the first year of production, especially those loaded with new technology. "This is one thing if you have the white-glove services," he said. "The bigger concern is that you are starting to have tens of thousands of vehicles out in the fleet."

Having cars with a suite of popular features, such as driving-assist Autopilot functions, Mr. Musk's Tesla has won the loyalty of many of his customers -- even when they encounter problems. But its ability to move into high-volume production is putting that loyalty to the test.

"I am totally willing to overlook the issues if Tesla fixes it," Ms. Carter said, estimating one or two trips to the dealer is what it should take. If she had the same problem on her Cadillac Escalade SUV, she said she "would be furious."

--John D. Stoll contributed to this article.

Write to Mike Ramsey at michael.ramsey@wsj.com

(END) Dow Jones Newswires

April 19, 2016 15:27 ET (19:27 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.