The increasing number of Tesla vehicles approaching the end of their manufacturer's warranty coverage drives Tesla's service-related revenues, says Frost & Sullivan
SAN ANTONIO, July 12, 2022 /PRNewswire/ -- Tesla's shift toward a vertically integrated sales and service model creates the need for traditional partnerships with third-party franchised dealers for vehicle repairs, finds Frost & Sullivan's recent analysis Growth Opportunities in Tesla's Global Aftersales Strategy. This leads the company to ramp up its mobile service fleet and collaborate with independent aftermarket repair service providers globally to sustain customer satisfaction. Additionally, as the number of out-of-warranty Tesla vehicles increases worldwide, the service and aftersales segments will emerge as a positive gross margin contributor for Tesla.
Electric vehicle charging station
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"Rapid improvements in Tesla's over-the-air (OTA) update capabilities beyond infotainment and navigation system updates could create new subscription-based aftersales revenue streams for Tesla," said Anuj Monga, Mobility Research Associate Director at Frost & Sullivan. "Electric vehicle (EV) manufacturers are well-poised to leverage data monetization opportunities by offering OTA update capabilities."
Monga added: "Mobile service on customer premises comprises nearly 70% of repair and service jobs. This resulting low-cost structure enables Tesla to improve its mobile service segment's bottom line, thereby driving gross service margins."
To tap into the growth opportunities of battery-electric vehicles' (BEVs') expanding after-sales and service market:
- Independent repairers with financial resources should collaborate with Tesla and other BEV original equipment manufacturers (OEMs) to offer aftersales service support.
- OEMs should offer additional services through OTA updates to customers willing to subscribe to these features for a fee or in-app purchase.
- Independent aftermarket repairers should move fast to form partnerships with manufacturers and offer mobile services to customers and fleets.
Growth Opportunities in Tesla's Global Aftersales Strategy is the latest addition to Frost & Sullivan's Mobility research and analyses available through the Frost & Sullivan Leadership Council, which helps organizations identify a continuous flow of growth opportunities to succeed in an unpredictable future.
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Growth Opportunities in Tesla's Global Aftersales Strategy
Source: Frost & Sullivan