Tesla hit in Germany after car-rental company cancels Model 3 order

Stefan Moeller began this year with an ambitious target: to make his car-rental company Nextmove the biggest Tesla customer in Germany by adding 100 Model 3s to its fleet. He likened the electric car’s arrival on Europe’s shores to a tsunami washing over a region that’s been slow to embrace battery-powered autos.

But the powerful wave Moeller expected has collapsed to a trickle. After weeks of back and forth over unfulfilled repair work and quality issues involving the initial 15 sedans that Tesla delivered -- from scratched bumpers to moisture trapped behind the headlights -- the order of the remaining 85 Model 3s was called off.

Tesla also tried to deliver cars that had been previously registered, which would have locked Nextmove out of Germany’s electric-car incentive program and potential tax refunds, Moeller said.

“The Model 3 is a fantastic car. Some of our customers totally fell in love with it,” said Moeller, whose Leipzig-based company has more than 300 electric vehicles in its fleet, including 38 Model S and a dozen Model X. “But the organization behind it doesn’t match that. It’s really sobering.”

Subpar service could be a barrier to Tesla making more of an impact in Germany, where exacting car owners value how painstakingly their BMWs and Mercedes are cared for just as much as the speed of the Autobahn.

CEO Elon Musk, who is famously hostile to Twitter critiques, acknowledged earlier this year that a lack of service centers in Germany was hampering the company’s growth there.

Tesla believes Nextmove’s decision to cancel its remaining Model 3 order was not entirely due to quality issues, and was largely influenced by frustration with an unrelated dispute earlier in the year, according to a spokesperson. The automaker was in the process of making repairs and had provided loaner vehicles to the customer at the time the order was canceled.

The Tesla spokesperson blamed the registration issue that Nextmove described on a temporary issue with matching identification numbers to vehicles and said the issue was resolved for impacted customers.

Poor service is an issue that is already plagued Tesla in Norway, Europe’s largest electric-car market per capita. Dented and sloppily painted vehicles have fueled the highest level of complaints per unit among all automakers, according to the nation’s consumer watchdog.

In Europe, Tesla is racing against time as more established players wake up to the electric future. The continent is projected to be the world’s second-largest driver of electric cars in the next decade, trailing only China. Customers can already choose between a growing number of battery-powered models from the likes of Mercedes-Benz, Jaguar and Audi.

Moeller said the remainder of Nextmove’s Model 3 order was canceled after he demanded an improved process for handovers and fixes. And he says the automaker’s issues extend beyond the Model 3.

He spent two years waiting for Tesla to replace a seat in a Model X that was delivered in July 2017 with a hole in it. A Model 3 arrived more recently with a protruding bulge on one tire. Moeller shared with Bloomberg News his email correspondence with Tesla and photos of the blemished vehicles.

The Tesla spokesperson said the company’s data does not indicate any unusual vehicle quality issues specific to Germany or anywhere else in the world. The company said there is a small chance cars are blemished during transport to customers and that it addresses those issues quickly.

Nextmove is not an isolated case. German social-media platforms and online forums are abuzz with customers airing complaints about faulty parts from sensors to suspensions. Many also describe Tesla’s sales organization in the country as unresponsive.

“I’m still thrilled by the car, because it’s just so much better than anything I’ve driven before, but the quality of the service and some technical parts are seriously worrying,” Rouven Volk, who said by email that he ordered his Model 3 in February and was slated to take delivery less than a month later.

Volk chronicled an odyssey with Tesla that began with a car that could not be handed over because of a defective main display. The company opted to source another Model 3 from its European pool and set a new handover date for a month later. Then, the car had stains on the outside and in the interior, and a cable dangled from where there should have been a light for the back seats. The charging cables and winter tires he ordered were nowhere to be found.

The Tesla spokesperson said unhappy customers can return their cars for a full refund up to seven days after purchase. The company’s data shows German customers have largely been satisfied with their vehicles, including the quality and condition of cars upon delivery.

“Generally, early-adopter customers forgive unconventional newcomers like Tesla a lot of things,” said Stefan Bratzel, a researcher at the Center of Automotive Management near Cologne. “But the more Tesla enters broader customer segments, the more distribution and service have to function.”

Sales of the Model 3, Tesla’s most affordable model, helped make the brand the fastest-growing in Germany in the first seven months of the year, according to data from industry watchdog KBA. While 6,816 registrations is still well behind market leaders, Tesla outsold brands including Jaguar and Alfa Romeo.

Tesla is in the process of doubling the number of service centers in Germany to 17 locations, with a focus largely on urban areas including Berlin, Hamburg and Munich, according to the company’s website. The automaker is also branching out into midsize cities such as Kiel, Ulm and Mannheim, and separately lists 16 retail stores in the country.

The brick-and-mortar presence is still a far cry from the sprawling infrastructure that established automakers have built in Germany over decades. Volkswagen Group, the top-selling automaker in the country, has hundreds of dedicated sales and repair outlets.

Then again, Musk is betting the looming shift toward electric cars and digital services will upend the retail and after-sale business. Battery-powered autos have fewer components that are at risk of breaking down. Tesla also plans to expand its fleet of mobile service vehicles by 50 percent and increase mobile service coverage by fivefold this year in Europe, according to the spokesperson.

For Volk, rust started showing between the front fender and the driver’s door of his Model 3 after about 100 days and 15,000 kilometers, which he attributes to friction of sheet metal that was not properly sloped. Getting ahold of Tesla service personnel has been challenging because some employees familiar with his case have left the company, Volk said.

Malte Ahl said in an email he withdrew the purchase contract for his Model 3 in March after Tesla did not respond to his concerns about glitches including poor paint quality, scratches on the passenger seat and dysfunctional switches.

“I view this way of dealing with the most loyal Tesla fans as unfair and not sustainable,” he wrote in an attached letter addressed to the company’s German unit.