Battery Warranty not unlimited miles?

[rxlawdude]

So they do do the exhaustive testing? Cuz they went from prototype to production incredibly fast and skipped phases that other manufacturers do. You can argue plenty of things as a "design flaw" if it doesn't work as expected. Truth is an affirmative defense to libel, correct?

IF true. Of course, that would be for the fact finder of the court.
AR stated plainly that EVERY part that Tesla makes has design flaws and that they do not adequately test EVERY part. Sounds false to me.
Anyway, I'm not corporate counsel and I really don't care whether Tesla reacts or not.

Don't we have enough hyperbole in the world already?

 

[cwerdna]

AR stated plainly that EVERY part that Tesla makes has design flaws and that they do not adequately test EVERY part. Sounds false to me.

It's funny that automotive reliability and durability testing is mostly crickets, but judging by the Model S (e.g. at least 3 folks here on TMC on somewhere past their 7th drive unit and MANY others have had theirs replaced for noise and some for failure, even in the past year) and esp. the X, one has to wonder about Tesla's long term reliability and durability testing procedures and standards.

And, if those are all great or comparable to that of major automakers, perhaps there's an issue w/manufacturing and/or supplier consistency?

Model 3 sounds like a complete rush job.

(For context, Car Reliability History | Detailed Ratings has average problems rates for each of the areas for a given 1 year window (much shorter for latest model year though) of a given model year. CR in the past has required at least 100 responses from a given model year of a vehicle in order to report reliability for that model year.)

 

[Brian-MS90D]

This would obliterate a lot of Bolt and Leaf sales.

I disagree in the short term (1 to 4 years). Tesla simply cannot make that many Model 3's which is one reason why this discussion is moot.

For all we know (and this is pure speculation), the reduced warranty (relative to Model S and X) may be part of their anti-selling strategy because there is no conceivable way Tesla could possibly meet the market demand for Model 3. They may intentionally be raising the price for Model 3 through various means (such as reduced warranty) in order to lessen demand. Again, just speculation but not an unreasonable guess.

 

[internalaudit]

I disagree in the short term (1 to 4 years). Tesla simply cannot make that many Model 3's which is one reason why this discussion is moot.

For all we know (and this is pure speculation), the reduced warranty (relative to Model S and X) may be part of their anti-selling strategy because there is no conceivable way Tesla could possibly meet the market demand for Model 3. They may intentionally be raising the price for Model 3 through various means (such as reduced warranty) in order to lessen demand. Again, just speculation but not an unreasonable guess.

I think EM promised a $35k base Model 3 and he just has to nickel and dime Model 3 owners to get the margins way up by way of forced PUP purchase for those with frigid winter climates and almost forced ESA purchase (which I'm going to purchase no matter what if I am getting a Model 3) to extend the warranty on the drive unit and distance on the battery. Those two options alone will move the $35k purchase to about $43-45k.

In my case, if the Model 3 ESA doesn't extend the warranty of the drive unit to eight years (from four) and the battery mileage to at least 150k miles (from 100) and if I miss the provincial EV incentive (June 2018 inflection point) because Tesla gave me a late 2018 delivery estimate, I might just take a wait and see approach and may go with a competitor when 50-60 kWh battery BEVs are made available (Leaf 2.0, Honda non-Clarity BEV, or even wait for a Toyota).

With no Right to Repair in the horizon, the cost of ownership post-warranty period for a Tesla can be significant and my household is not used to that and won't be taking our chances unless the ESA provides decent coverage. We finance our cars over 3-4 years but keep them for as long as the cost of repair / maintenance is insignificant (a few hundred here and there/annually, or even less). So far our Honda's and Toyota have been holding up fairly well.

I hold a first day reservation but don't mind the late 2018 delivery date because AWD deliveries are all post-June anyway. Even current Canadian Tesla owners have a late 2018 delivery estimate so I'm not complaining.

If Tesla were to open the Right to Repair, offer a decent ESA, and heated steering wheel, I will not hesitate to purchase a Model 3 SR AWD with PUP and I will not consider a competitor's offering but I doubt the Right to Repair is going to happen in the next two years.

 

[Brian-MS90D]

@internalaudit , I don't think they are trying to nickel and dime you, but very likely - per my previous post - trying to discourage those on the fence such as yourself from purchasing now.

 

[internalaudit]

@internalaudit , I don't think they are trying to nickel and dime you, but very likely - per my previous post - trying to discourage those on the fence such as yourself from purchasing now.

Why would Tesla discourage those on the fence when it can result in cancellations? I have not come across any marketing strategy where a company encourages would-be customers to cancel their orders if there is no price error involved or if the customer cannot go up or down market anyway. I understand, though, the value of keeping reservation numbers piling up (putting people like me at the tail-end of the queue) so I can't really agree with your comment that Tesla wants to upsell the S and X when I have no intention to purchase either because they're too costly for the benefits I will reap. There is no down market because the 3 is the bottom model.

I know I'm just one reservation but I'm pretty darn sure there are a few hundred like me who are concerned with the limited 4-year drive unit warranty, battery pack at 100k miles and the lack of the Right to Repair in case the ESA is far inferior compared to what is being offered on the S and X. I don't mind scrapping a $45k Model 3 on its 9th year if repairs will be exorbitant but I'm not willing to purchase a vehicle that I have to sell dirt cheap on its 5th year.

It's best for Tesla to not encourage those who are adamant on getting a Model 3 from picking one up asap (delaying AWD and smaller battery pack are good strategies because I think more people want AWD and stick with the SR model -- I'm in that camp) but not to discourage those on the fence resulting in cancellations.

Also, why would Tesla discourage people with delivery dates in late 2018 (delivery dates don't even matter to most people who are not rushed to buy because they have ICE vehicles to tide them over)? I sure won't be cancelling my reservation until I see an inferior ESA that is likely not going to change or Tesla formally reneging on the opening the Right to Repair or reading major issues with the vehicle.

I'm willing to leave that $1k deposit with Tesla for two or three years but I sure won't be purchasing a $45k Model 3 if any of the above three issues crop up. The deposit is refundable but a purchase is going to be a decent sized financial commitment.

 

[gekcut]

@internalaudit , I don't think they are trying to nickel and dime you, but very likely - per my previous post - trying to discourage those on the fence such as yourself from purchasing now.

Interesting that in two hours your speculation went from "not unreasonable" to "very likely". If you are correct, then to quote Pepper Brooks: "It's a bold strategy, Cotton. Let's see if it pays off for 'em".

I think it is more likely Tesla is concerned that they may incur significant costs with a shorter warranty because drive units may fail.

 

[sorka]

As with anything that Tesla redesigns, there are always design flaws because Tesla doesn't do the type of exhaustive testing that other vehicle manufacturers perform.

Sure they are. The Model 3 will be alpha tested for the next 4 months by thousands of Tesla employees

 

[JeffK]

I distinctly remember an ignition design flaw that GM knew about for years and during that time people were killed or injured.

 

[cwerdna]

Why would Tesla discourage those on the fence when it can result in cancellations? I have not come across any marketing strategy where a company encourages would-be customers to cancel their orders if there is no price error involved or if the customer cannot go up or down market anyway. I understand, though, the value of keeping reservation numbers piling up (putting people like me at the tail-end of the queue) so I can't really agree with your comment that Tesla wants to upsell the S and X when I have no intention to purchase either because they're too costly for the benefits I will reap. There is no down market because the 3 is the bottom model.

Their queue of reservations already is very long and it will take a long time to work through that.

Per Tesla Model 3: Elon Musk has ‘zero doubt’ about 10,000 units per week in 2018, corrects reservation tally

“To be more accurate, there have been 518,000 gross reservations for Model 3 and then we have 455,000 net reservations. But those cancellations occurred over the course of more than a year. The net gain since Friday, net of cancellations, has been over 1,800 per day – but I just didn’t want to leave people with the wrong impression.”

Musk again added that he doesn’t think those numbers are representative of Model 3 demand because he insists that Tesla is not actually trying to sell the vehicle.

He continued:

“I think this is inconsequential because with a small amount of effort, we could easily drive the Model 3 reservation number to something much higher, but there’s no point. It’s like if you have a restaurant and you’re serving hamburgers and there’s like a 1 hour wait for a hamburger, do you really want to encourage more people to come order hamburgers? That doesn’t make sense.”

Instead of the burger, Tesla wants people to order Model S and Model X. The company says that they are seeing more Model S orders since the Model 3 event last week, which had been a concern for analysts before due to possible cannibalization between models.

Model S and X are likely higher margin anyway. They're produced in quantity now and there's not a huge backlog for those compared to 3.

Other competing vehicles w/comparable range and price to the 3 will likely appear in the next few years besides the Bolt which has been already shipping for awhile.

 

[David99]

I assume the battery warranty only covers failure, not degradation or any other performance and charging speed reductions. Actual manufacturing failures are rare and usually show up soon after the car is sold and driven. There is little risk in offering a longer warranty on the battery. After the experience with my Model S after 125k miles makes me pretty confident that the battery will be fine.

The drive train is a different issue, though. My car is on it's 7th drive unit. The last one seems to hold up great, but I would have been out of warranty with the last three replacements if I only had the warranty of the Model 3. Not to be a pessimist, but I would not buy an early Model 3.

 

[sorka]

Sure they are. The Model 3 will be alpha tested for the next 4 months by thousands of Tesla employees

....before it's released to the public

 

[cwerdna]

(unable to edit my post)

Model S and X are likely higher margin anyway. They're produced in quantity now and there's not a huge backlog for those compared to 3.

Besides this, an order for a Model S or X means they can fulfill the order MUCH earlier than a Model 3 going into the queue now. This means both revenue and profit booked MUCH earlier compared to the 3 which is still in production ramp up phase and again, has a massive backlog.

 

[vinnie97]

I assume the battery warranty only covers failure, not degradation or any other performance and charging speed reductions. Actual manufacturing failures are rare and usually show up soon after the car is sold and driven. There is little risk in offering a longer warranty on the battery. After the experience with my Model S after 125k miles makes me pretty confident that the battery will be fine.

The drive train is a different issue, though. My car is on it's 7th drive unit. The last one seems to hold up great, but I would have been out of warranty with the last three replacements if I only had the warranty of the Model 3. Not to be a pessimist, but I would not buy an early Model 3.

An extended warranty/service plan should allay some of the concerns, but with enough add-ons it almost becomes more prudent to buy a low-mileage Model S.

 

[internalaudit]

Interesting that in two hours your speculation went from "not unreasonable" to "very likely". If you are correct, then to quote Pepper Brooks: "It's a bold strategy, Cotton. Let's see if it pays off for 'em".

I think it is more likely Tesla is concerned that they may incur significant costs with a shorter warranty because drive units may fail.

I don't always go back to prior posts as long as I'm not contradicting or flip flopping between previous ideas.

I bet my bottom dollar that you didn't even mean what you said in the second line -- Tesla will be less concerned about absorbing repair costs with a shorter warranty. It would be quite interesting if you meant to say that as it's a contradiction in itself.

Also, if Tesla is concerned with repairs, why not release the AWD version first when those AWD S'es were never plagued by the drive unit milling issues? Splitting the power between two units seem to lower the probability of unnecessary bearing wear.

 

[internalaudit]

(unable to edit my post)
Besides this, an order for a Model S or X means they can fulfill the order MUCH earlier than a Model 3 going into the queue now. This means both revenue and profit booked MUCH earlier compared to the 3 which is still in production ramp up phase and again, has a massive backlog.

A lot of people looking into ordering the 3 will not even consider an S because of its size and price. I would never consider an S because I would never be able to recover the depreciation / potential repair costs down the road with the fuel savings. Many 3 would-be buyers are more practical and have a more limited budget to work with.

The full federal or state credit on the S will not close the gap in pricing even if the 3 was not eligible for any credit at all.

Not sure how Tesla's assembly line works and how flexible they are to model changes but perhaps a few of them have been tweaked to assemble the 3 instead of the S or X.

Upselling works much better for certain services (e.g. pay 50% more get 300% more hours) and less expensive items like smartphones, laptops and clothing but it's harder to upsell and have someone pay $30k more, or even $300-400/month when leasing. Of course with the very affluent, money will be no object but even many affluent households don't splurge on "luxury" priced autos because a mainstream car will do just fine and cover 90-95% of the needs/wants.

 

[hill]

.......snip..... Truth is an affirmative defense to libel, correct?

a more important defense than asserting truth as absolute defense (because often shotgun pleadings yield a better result than just a single action) is 'poverty' (ie shielded assets) ..... like OJ ..... when he gets out in a couple months there will be a nice chunk of change waiting for him - & no one can touch it.
This has been legal fun facts.

on a serious note though, Tesla has been known to vacillate here and there. One time frame says you can get perforated cooled leather, next thing you know you can't. One season sees your lowest price at one figure, a few weeks later - gets it dropped a thousand or more. one season you can get unlimited supercharging, then you're told you can't anymore, then... you can, under a set of conditions. With that kind of flip flop, wait a while .... & if there are large amounts of issues, like with motors before, we'll go back to infinite ... & then maybe it will go away, again. Flippy floppy ... that doesn't disturb anyone, does it?
.

 

[Brian-MS90D]

@internalaudit , most of your questions would be answered if you followed the Tesla news more closely (I don't mean this as a ding or insult, only to point out that your questions have already been answered). Tesla is actively trying to discourage Model 3 reservations/purchases now. Elon has expressly said this. He also used the analogy that if you were running a hamburger stand and you had a 1.5 hour long line, you would not go out and try to get more people in line. With the current backlog and rate of new reservations today, Tesla will not "feel" a few hundred cancellations as you suggest (and I agree there will be cancellations over the DU warranty).

You may disagree on this strategy for sure, but that it is the strategy.

 

[internalaudit]

@internalaudit , most of your questions would be answered if you followed the Tesla news more closely (I don't mean this as a ding or insult, only to point out that your questions have already been answered). Tesla is actively trying to discourage Model 3 reservations/purchases now. Elon has expressly said this. He also used the analogy that if you were running a hamburger stand and you had a 1.5 hour long line, you would not go out and try to get more people in line. With the current backlog and rate of new reservations today, Tesla will not "feel" a few hundred cancellations as you suggest (and I agree there will be cancellations over the DU warranty).

You may disagree on this strategy for sure, but that it is the strategy.

Just because it is in the news and announced, it doesn't mean it's a strategy. That's why the phrase "take it with a grain of salt" was coined.

If Tesla is actively discouraging, why can't it close the reservation system? That would be akin to your hotdog stand example where people beyond a certain point along the queue are asked to come back another time. Think about it for a minute.

I don't care if you disagree with me or about people disagreeing about my post (as long as I don't disrespect or step on anyone) but what you and Tesla says don't make any sense especially if Tesla is still accepting reservations.

Unless the quality of the Model 3 will be above average in a few years' time, the company won't have its leg up over other competitors. Not bashing Tesla but just saying that it definitely cannot rest on its laurel.

 

[Brian-MS90D]

@internalaudit , okay, you are free to speculate about what goes on behind the scenes. I'm going to operator on what is public knowledge and stated. Either of us could be wrong in the end, for sure.