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Does the Tesla battery hack represent the future of loyalty?

A corporate PR move tied to Hurricane Irma may provide an intriguing glimpse of the future of loyalty: news that Tesla remotely increased the driving range of its vehicles for Tesla owners fleeing from Hurricane Irma was initially greeted with the requisite positive PR bump before commentators started asking lingering ethical questions. To our mind, the bigger question is how much we’re glimpsing into the future of loyalty marketing. As more of our vehicles, appliances and devices become software-driven and connected to the cloud, will spend and status determine what features they include? Are we looking at a future in which our device capabilities depend on our loyalty? Stay tuned.

By Rick Ferguson

At first glance, Tesla’s move looked like a classic stealth public relations tactic. The news became known first on the Tesla owner Reddit forum last week, when a Tesla owner posted a question to the forum:

I’m in South Florida and I own a MS60. I just checked my app and look what it says [that the range is 242 miles]. I’ve never been higher that 215 miles. Did Tesla do this for evacuations? Anyone else? Glitch?

Shortly after the original post, the Redditor received the following email from Tesla:

“We at Tesla hope that you and your loved ones are safe while preparing for the hurricanes approaching Florida. Due to these exceptional circumstances, and to help you better prepare to evacuate and get to safety, your vehicle has been adjusted at no cost to you to temporarily access the additional better capacity until September 16th. You will notice the badging on the instrument cluster will read 75 during this period. We hope that this allows you to travel to your next destination with confidence and ease.”

The battery hack was possible for certain Model S and Model X vehicles sold with a 75kWh battery that had been software limited to 60kWh as part of a limited test promotional offer. Tesla owners could pay an upgrade fee of between $4,500 and $9,000 to access the increased battery range, or settle for a more limited range and pay less. This Tesla owner had opted for the more limited-range version, and thus received the pleasant surprise from Tesla in advance of Hurricane Irma’s approach.

Tesla most certainly made this move out of desire to be a good corporate citizen; in a statement issued to the online publication Elektrek, Tesla said it did so in response to an owner’s request to access the increased range to drive out of a mandatory evacuation zone. To the company’s credit, it then extended the range of all eligible Tesla models in Florida. While the company made no public notice of the move, they were most likely also aware that word would spread, leading to a nice PR bump because of it. Nothing wrong with that! And sure enough, the word was positive, with most reporting press outlets praising the company for its responsiveness.

Still, some analysts are asking questions about Tesla’s ability to artificially restrict vehicle capabilities and then remotely provide access to them. The increased range, after all, is available to Florida Tesla owners only until September 16, at which point the software throttle reengages. The move prompted Washington Post writer Brian Fung to wonder what the move means for the future of car ownership:

“The decision reflects a key distinguishing feature of Tesla’s business, one that could divide consumers as they think about the future of car ownership… Tesla’s decision to offer lower-priced cars with certain performance compromises could be viewed as expanding consumer choice and giving users flexibility. At the same time, because the underlying hardware remains the same no matter what level of software you’ve purchased, you could say that Tesla has locked the full potential of its vehicle behind an arbitrary paywall… This [ability to remotely update vehicles] can be a gift, when getting caught with the ‘wrong’ feature package risks putting you in a hurricane’s way. At the same time, it highlights the tremendous power your car company can have over you, not to mention whether it’s consumer-friendly for a company to charge you thousands of dollars to access hardware that takes just a few keystrokes to turn on.”

The battery upgrade isn’t the first time Tesla has provided remote vehicle upgrades to owners. Tesla vehicles are essentially mobile, cloud-connected computers; hackers even recently remotely penetrated a Tesla’s onboard software to shut down the vehicle, a move that prompted Tesla to issue a software security patch to all its vehicles. Software-limited features, long a reality for computer and console games and other software-only purchases, have now entered the physical realm, and the trend will no doubt accelerate.

So how do manufacturers resolve these nascent ethical dilemmas? One way would be to make these feature limitations transparent and opt-in through, say, a customer loyalty program.

Let’s say Tesla institutes a loyalty program for owners that grants tiered status for miles driven: the more miles you drive, the more vehicle features you can access. Or maybe the program is tenure-based, and you earn status and additional features based on how long you’ve owned a Tesla. And then maybe the Tesla Driver Rewards program strikes earn partnerships, and you can accelerate earning higher-status features every time you charge up at, say, a Whole Foods supercharger station and for all purchases made on Amazon. Or perhaps you’ll earn accelerated status by charging purchases on your Tesla Driver Rewards Visa issued by Chase bank.

And then imagine that similar reward programs pop up associated with your smart home appliances, your voice-activated digital assistants, and your smart phones. Think it sounds far-fetched? I’ll take your bet right now that this future is unfolding – and I’ll even give you odds. Tesla’s PR move may, in fact, be a bellwether for the future of loyalty marketing. Provided locked features are available to best customers based on their behavior, there’s no reason why that future can’t benefit us all.

Rick Ferguson is Editor in Chief of the Wise Marketer Group.

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