$12K Battery replacement option

[smorgasbord]

Seven years from now:
* would I still own that car in 7 years?
* would it actually need a new battery?
* would I want to keep my 7-year old car for another 7 years?

The battery "warranty" is transferrable. If you want to sell the car, say 4-5 years down the road and your battery is showing signs on degradation, having the warranty may increase its value in the market, especially if new batteries from Tesla are going for, say, $20K.

OTOH, if replacement batteries are going for under $15K in 2016, then you'd likely have been off investing the $12K.

EDIT: One more point - there might be two battery offerings in the future. One would be the $12K pre-purchased replacement at 53KwH. Another would be an upgrade replacement at whatever Tesla wants to charge.

 

[daniel]

... the problem is that [in my opinion] we're not likely to see 3rd party "Tesla Roadster compatible" batteries in 5-7 years when these agreements mature. So this will leave TM in the position that they might be able to supply replacement batteries for less than $12K, but why would they? ...

This is a possibility, and a risk.

As vfx also points out, on top of the battery price bet, you are basically giving TM a seven year interest free loan of $12K ...

... What if you took the deal, but after 7 years your battery is still at 85% capacity and you don't mind about that 15%?...

These were among my reasons for not taking the offer, too.

I find it difficult to understand why one would want to order a battery today, for delivery 7 years from now.

It would be for someone who really could not afford to take the risk of being unable to pay for a new battery in the event of a price hike.

Seven years from now:
* would I still own that car in 7 years?
* would it actually need a new battery?
* would I want to keep my 7-year old car for another 7 years?

I think I'd rather park the money in a bond somewhere (let's say a green municipal power company bond), and wait 7 years.
The odds are pretty good that I'll want to trade it in for a new 2018 Tesla.
But if not, I can always cash the bond and get a new battery when I feel I need one.

Ardie

More reasons why I didn't take it.

There is some risk involved either way. But I can afford a new battery if I need it, and even at half the present range, the car still works for me.

As my salesman said, the only reason for paying $12,000 now is if you are the worrying type, and the secure knowledge of a pre-paid battery replacement will give you peace of mind.

Of course, it is possible that this is a great bargain that Tesla offered because it was desperate for cash. But that, too, is a risk I can afford to take.

 

[Dragon]

7 years is a lot of time. You can't know what will happen until then. The stupidest things could happen which would make a new battery useless for you. What if you crash your car in thousand pieces? God beware!

Everytime I come in contact with someone from Tesla I ask about the battery pack. If they are making a new one for the Roadster. All responded they sure will AND that if you have the replacement option you'll get that enhanced one. That still isn't enough to convince me to buy it because of the reasons you all mentioned earlier.

 

[vfx]

...Everytime I come in contact with someone from Tesla I ask about the battery pack. If they are making a new one for the Roadster. All responded they sure will AND that if you have the replacement option you'll get that enhanced one....

As good as the paper it's written on.

 

[smorgasbord]

As good as the paper it's written on.

The paper says that they'll give you at least 53KwH of capacity. I wouldn't be surprised if they accomplished that with "refurbished" packs, or some other such thing. As long as the usable capacity is 53KwH when they give you your vehicle back, they're meeting the letter of the contract.

Note that the price includes labor, which I imagine is not a small amount. And, they get to keep the old battery pack, unless they're required by law to give it back to you, in which case they charge you. I'll see if I can scan and post the agreement tonight. I have 2 months to decide, and am thinking that for resale value alone it might be worthwhile. Unfortunately.

 

[tdevince]

The $12K is possibly a bet that Tesla is making that their cost will drop but there is no guarantee that they will drop prices for their customers.

If they have sold any battery replacement contracts, I doubt you will see replacement batteries for less than 12K to the customer. They can't do that to their customers who bought the contract without some sort of compensation. Wouldn't be a good PR move.

 

[7racer]

i have the document (battery replacement) and the extended service agreement. Am I allowed to post it?

 

[benji4]

If they have sold any battery replacement contracts, I doubt you will see replacement batteries for less than 12K to the customer. They can't do that to their customers who bought the contract without some sort of compensation. Wouldn't be a good PR move.

Nor would it be a good financial move. At a minimum they'll amortize it at 6 to 8% per year which would mean the replacement pack will be $20,000 or so. That's the minimum -- if the pack + labor actually costs more than that, then that's what it will cost. Of course they'll need to build in a margin of profit as well.

So if you want to make 6 to 8% per year, buy the replacement pack. If you'd rather invest your own money, even though it's tough to make that kind of return these days, then keep your money and buy the $20,000+ replacement pack from them 7 years down the line. That will be for a 53KwH pack, and larger capacity packs will be more expensive of course.

 

[vfx]

If they have sold any battery replacement contracts, I doubt you will see replacement batteries for less than 12K to the customer. They can't do that to their customers who bought the contract without some sort of compensation. Wouldn't be a good PR move.

Sorry, I didn't mean to imply they would change the contract on people. Just sell future batteries that cost them <$12k to non contract customers for whatever they may feel like charging.

And Tesla does have a history of breaking contracts but I will not bring that up again.

Ooops (just did).

 

[S-2000 Roadster]

And Tesla does have a history of breaking contracts but I will not bring that up again.

I don't think that Tesla broke any contracts, otherwise at least one of their very rich customers would have sued their asses off. I think it's fair to say that Tesla made a drastic change in the spirit of the agreement without literally violating anything that was specifically written down. Thus, the base price stayed exactly the same. Only the option prices and standard options changed. This is a very litigious country, and I don't see how any company can break a contract with hundreds upon hundreds of cosigners without suffering a single loss in court.

 

[daniel]

... if you want to make 6 to 8% per year, buy the replacement pack. If you'd rather invest your own money, even though it's tough to make that kind of return these days, then keep your money and buy the $20,000+ replacement pack from them 7 years down the line...

There are too many unknowns: Maybe in 7 years or even 10 you don't need a new pack. Maybe you wreck your Roadster and Tesla gives you back your $12K without interest. Maybe in ten years you're driving a different car that you prefer and the resale market value of the Roadster with the replacement option is only $6K more than the value without, for whatever peculiar market reasons. Maybe in ten years there's a car so much better, with a battery pack so much better, that the value of a used Roadster is only $50K and the new pack is worth $6K. There's even the possibility that Tesla goes under (FSM forbid!) and there are no battery packs in 7 years. Maybe in two years you have to sell the car, and the buyer does not think a new battery five years down the road is worth $12K. Maybe Tesla sells new packs for $14K, not $20K, and your own investment would have gained you more. Your $20K figure is pure guesswork.

Either course, buying the option or not buying it carries risk that the other choice would have been better.

My primary consideration is that half the range of the Roadster would be plenty for me, and that changes the whole calculus concerning battery replacement.

A contract locks you in. I'd rather keep my options open.

 

[vfx]

I don't think that Tesla broke any contracts...

Wrong.
Tesla bet that purchasers were so excited/impatient/zealous/worn out for their cars that buyers would just take it. Those wealthy customers could absorb the $8K loss as easily as suing and everyone knew that destroying the company with a lawsuit would defeat the purpose of the common goal of worldwide electric transportation.

There is another small EV maker out there that operates on the "for the good of the planet" model to get away with a lot of chicanery.

 

[doug]

Maybe you wreck your Roadster and Tesla gives you back your $12K without interest

Would they really do that? If you bought an extended warranty, then totaled your car, would they pay that back?


So did anyone actually buy this battery option?

 

[vfx]

...So did anyone actually buy this battery option?

So did anyone actually by this battery option?
What made you decide to buy it?
Would you do it again knowing what you know now?
Do you recommend other do the same?

 

[S-2000 Roadster]

Wrong.
Tesla bet that purchasers were so excited/impatient/zealous/worn out for their cars that buyers would just take it. Those wealthy customers could absorb the $8K loss as easily as suing and everyone knew that destroying the company with a lawsuit would defeat the purpose of the common goal of worldwide electric transportation.

Is this fact, or supposition? Did you have a contract with Tesla Motors at the time? Did they literally violate the letter of that contract?

I can say for a fact that I signed a contract with Tesla later than those who got in below $100k, and when all of this uproar occurred, nothing in my contract was violated. I eventually got all of my money back because I couldn't afford a Tesla in 2009. I still have a copy of that contract. The Roadster that I'm driving now is a 2011, so it's a whole different ball game. In other words, it's clear from your avatar that you have a Tesla Roadster, but it's not clear from your comments whether you have first-hand knowledge of contract violations. I certainly never saw any contract violations, in fact they honored my contract to the last dollar.

 

[mwg]

I purchased the battery replacement option.

Peace of mind was the driving factor. I own another limited production vehicle and I'm always mindful of parts availability. I've seen price increases and limited availability of components since my car models production ended. There are usually alternatives, but they often require additional investment of time, money and the occasional compromise.

I haven't thought twice about the decision to purchase the agreement. Diminished battery capacity is guaranteed, and I plan to keep driving the car. I would accelerate my replacement timetable if I heard about layoffs, closing stores or limiting future factory production.

I wouldn't advise anyone on the issue as I saw this as a personal decision influenced by past experience. Could others get a higher capacity battery for less at a later date? I would hope that option exists.

 

[vfx]

Is this fact, or supposition? ..

I wish I could find if there was an actual thread on this I could point you to on this subject from back in the day. I am tired of beating this drum but I just want keep in the forefront that Tesla is not above contract slight of hand. Even me bringing this up risks my standing with Tesla.
Fact. We were "Locked In". We were told what was included with the car, we put down our money and then they changed the package. One owner who raised a stink was denied from even buying a car. Later on, cooler heads prevailed and he is now a happy owner. This Blog documents the moment owners >#213 and <#501 found out about the contract changes.

At this point it all sounds like sour grapes. S-2000, your posts are terrific and we "old timers" appreciate the remarkable contributions you are making here on TMC in such a short period of time. I wish you had bought in that earlier round as we would all be the better for what you would have brought here over the past years. If you would like to discuss this uncomfortable subject further please PM me.

 

[S-2000 Roadster]

I am tired of beating this drum but I just want keep in the forefront that Tesla is not above contract slight of hand. Even me bringing this up risks my standing with Tesla.
Fact. We were "Locked In". We were told what was included with the car, we put down our money and then they changed the package.

At this point it all sounds like sour grapes. S-2000, your posts are terrific and we "old timers" appreciate the remarkable contributions you are making here on TMC in such a short period of time. I wish you had bought in that earlier round as we would all be the better for what you would have brought here over the past years.

You're welcome! If it seems like I'm doing a lot in a short period of time, it's mostly because I am technically an old timer, just that I wasn't terribly active until I got my own Tesla Roadster. You'll note that my account here dates back to April of 2009. My official Tesla Motors account is # 885 and dates back to the very beginning of 2008. I know several owners personally, including some that you mention, and was present when three were delivered locally. I was rather active during the 15 months that I waited in line for VIN 681.

I agree that it is extremely good advice for people to look very carefully at their Battery replacement contract and consider every possibly loophole. When folks here say "get it in writing," I couldn't agree more!

That said, there's a difference between being "Locked In," which is an implied agreement, versus the actual wording in the signed contract itself. I have only seen the contract that I signed, and I'm quite sure that Tesla Motors altered the contract between the $92,000 owners and the $109,000 owners. But Tesla did not violate anything stated in the contract itself. All of the complaints about the locked in options being changed after the fact are quite valid, but they are also distinctly different from a literal contract violation. So far, I have only seen evidence of Tesla Motors renegotiating on an implied agreement. I have seen no evidence of literal contract violations.

In other words, it seems safe to assume that anything you can get in writing from Tesla Motors is going to be honored. But, at the same time, any promises made verbally or even in the form of web configurations may be subject to alteration. I would say that Tesla Motors is not above using any loophole they can find if they are having a hard time.

 

[bonnie]

yep, I bought the battery replacement option. I went back and forth on it and finally made the call at the very last possible moment. Mwg said it best ... peace of mind. I want to retire sometime in the next 10 years, maybe go back to a bit of consulting now and then. It's one less thing to worry about in the future.

I also agree that I'd never advise someone else to purchase the option or not purchase the option. It's a decision that each person needs to make for themselves, based on a number of factors. I'm a risk taker by nature, but I don't take risks on the easy stuff ... having the replacement option is one less thing on my mind of things I need to take care of. But I also understand others may disagree.

 

[doug]

I purchased the battery replacement option. ...

yep, I bought the battery replacement option. ...

Thanks for sharing.