We haven't seen a lot fail but at 40k the spread between this car and a warranty car is too small (in my opinion) to make the math work. If there is a drivetrain issue (and we all know the milling noise is a common problem) not only is it not covered under warranty but Tesla won't even let you pay to have the work done. You'd have to find a third party. Likewise with the battery, though admittedly a B pack is not very likely to fail. Still though, it's not unheard of. Failures of either of these components effectively leaves you with a parts car whereas simply buying a slightly more expensive non-salvage car will net you a warranty for both.
There are more and more 70 - 80k mile P85's popping up for low $40,000's to pull the trigger on a car like this at this price. The risk is just too great. That said, those that say the car is only worth the sum of it's parts are likewise wrong. I think this is a solid buy at $35,000. I sold a 95% fixed, salvage S85 exactly a year ago for $35,000 and that wasn't the highest offer. Salvage or not, the moment you dip below the average sales price range, you'll get a ton of people knocking at your door with cash. This car will sell no problem.