Cost of early issues to Tesla?

[snooper77]

Hi all,

We all know that Tesla service is great: They have replaced drive units, batteries, door handles etc. on a lot of cars, probably because of early production issues.

While this is great for us owners, I wonder if they have properly factored in that cost into their calculations? They certainly didn't expect to have to replace hundreds of drive units, and those plus the associated labor are not cheap...

snooper77

 

[dsm363]

How do you know they've replace hundreds of drive units? How many hundreds are we talking about? A source would be useful.

 

[snooper77]

How do you know they've replace hundreds of drive units? How many hundreds are we talking about? A source would be useful.

I don't have a "hard" source, but:

1. I have read of at least a dozen if not two dozen drive unit replacements in this forum alone. Given that only a fraction of people who have this issue will post in this forum, we can safely assume there were > 100 replacements.

2. The kind of issue that is reported sounds like something systematic that leads to eventual failure (vibrations, hums, noise), so we can assume that hundreds more will have to be replaced.

 

[schonelucht]

I went through the Dutch thread about problems with the car and counted how many posters reported a new engine or drivetrain due to the noise issue. I counted 17 users who unambiguously posted about a new drivetrain. Some of those reported multiple replacements so I got a total of 22 drivetrain switches during after sales service. Approximately 2000 cars are delivered in the Netherlands. Extrapolating to all delivered cars we get at least 400-500 drivetrain changes. We can expect the real number to be much higher because 1) these are the self-reported and then only in two threads 2) Dutch cars are not early production run cars.

I also counted quite a few battery pack changes due to catastrophic failures. Not as many but still non neglectible (I stopped keeping track of them after a few instances). While the drivetrain issue is probably not an expensive one (just re-align the shaft and insert new ball bearings) a new battery pack may be more delicate in finding out where the issue is and recycling the relevant parts to make a refurbished one.

 

[yobigd20]

yeah my guess would be at least a few thousand drive unit and battery packs replaced. I feel like everyone I know has had either their drive unit or battery pack replaced. I expect this number could be even higher. some owner's have had their drive unit replaced 2 or 3 times now. I would expect that Tesla is putting these replaced units to good use. Refurbishing, recycling, or using them to enhance R&D, etc etc. If the defective parts are not manufactured in house but instead come from a third party, I would expect them to warranty the parts themselves to the third party so that they are not stuck with the costs.

 

[ItsNotAboutTheMoney]

Hi all,

We all know that Tesla service is great: They have replaced drive units, batteries, door handles etc. on a lot of cars, probably because of early production issues.

While this is great for us owners, I wonder if they have properly factored in that cost into their calculations? They certainly didn't expect to have to replace hundreds of drive units, and those plus the associated labor are not cheap...

snooper77

Any car company has to deal with warranties, and with Tesla's aggressive approach I expect them to factor in an initially high number of replacements, falling over time. But, maybe, maybe not.

I don't think the labor costs would be a really significant issue at this point because ownership's expanding and Tesla uses service centers for delivery.

 

[Todd Burch]

My general belief as a mechanical engineer and hearing from other EV drivers is that when these drivetrains get replaced, it usually happens very early on in the life of the car. Once you're past that initial hump, the drivetrains are reliable for a long time.

So we tend to see a larger number of initial drivetrain replacements because: 1) this is new technology, 2) this is a new car, and 3) If an EV drivetrain fails, it will likely be early on in the life of the car.

Tesla has likely made hundreds of minor revisions to the drivetrain design since the car first came out, making failures less and less likely.

I think Tesla may have seen higher than average warranty replacements early on, but they probably planned for this. I suspect they will see less powertrain failures in the later stages of a warranty period, so it will probably come out in the wash.

 

[highfalutintodd]

Plus hopefully they can re-build and re-use the replaced drive units so they're not a total loss. That should add up to some significant savings. If the bad drive units are useless, however.....

 

[scaesare]

Plus hopefully they can re-build and re-use the replaced drive units so they're not a total loss. That should add up to some significant savings. If the bad drive units are useless, however.....

All of the drive train replacements (including both of mine), were with re-manufactured units, so this is already the case...

 

[schonelucht]

On the contrary having hunderds of minor revisions of the same component would be a maintenance nightmare. It'd mean any given car an average service engineer sees would be different. Clearly that negates one of the main cost savings in mass production : repeatability. From my experience in industrial manufacturing that's a big no no and I suspect Tesla to be no different. Therefore much more likely they'll handle any modification to the drivetrain as they did with the battery pack. Have an A model and switch over at some point to a B pack instead of having incremental improvements.

I didn't note the timing when tallying up the Dutch replacements but these cars are at most 6 months old. Therefore if Tesla got on top of this issue, it is a very recent improvement.

 

[yobigd20]

All of the drive train replacements (including both of mine), were with re-manufactured units, so this is already the case...

huh, that's funny, because when I inquired how much a drive train would cost to replace if it failed post warranty they quoted me $16k-$18k. I hope that's not for a remanufactured unit...

 

[ElSupreme]

huh, that's funny, because when I inquired how much a drive train would cost to replace if it failed post warranty they quoted me $16k-$18k. I hope that's not for a remanufactured unit...

Tesla needs to figure this out soon. As cars get out of warranty their 'replace the drive unit' panacea won't work any more, because of your $16-18k quote. I had a drive unit replaced for something that was probably ~$600 to repair. But under warranty they can swap the drive unit (not hard to do actually) and send back the damaged drive unit to the factory where it will be refurbished and returned to another persons car.

So they either need to develop a pricing strategy to continue this mode of operation after warranties expire. Or learn how to fix drive units.

 

[scaesare]

I suspect that re-man parts are used for warranty work, and that anything you choose to do outside of that will get quoted new parts pricing.

Would be nice if they would eventually offer re-man pricing as well and give you a core charge refund for your old unit...

 

[tomas]

Tesla needs to figure this out soon. As cars get out of warranty their 'replace the drive unit' panacea won't work any more, because of your $16-18k quote. I had a drive unit replaced for something that was probably ~$600 to repair. But under warranty they can swap the drive unit (not hard to do actually) and send back the damaged drive unit to the factory where it will be refurbished and returned to another persons car.

So they either need to develop a pricing strategy to continue this mode of operation after warranties expire. Or learn how to fix drive units.

I think we should let Tesla worry about their economics vs. quality control equation. I'm personally very comfortable with the approach of having drive units and batteries swapped and returned to factory for repair/refurbish in controlled environment by experts with the right equipment. I suspect the economics are actually much better that way. I shiver at the thought of their service center personnel, with average tenure of ~ 2 months, dissecting a drive unit. Back in the day, any idiot (including me) could torque a spark plug, replace cap and rotor, even adjust timing. Not sure that is or should be the case with a sealed drive unit.

 

[yobigd20]

Tesla needs to figure this out soon. As cars get out of warranty their 'replace the drive unit' panacea won't work any more, because of your $16-18k quote. I had a drive unit replaced for something that was probably ~$600 to repair. But under warranty they can swap the drive unit (not hard to do actually) and send back the damaged drive unit to the factory where it will be refurbished and returned to another persons car.

So they either need to develop a pricing strategy to continue this mode of operation after warranties expire. Or learn how to fix drive units.

well lets hope thats the case, because if I get hit with a repair bill like that, that same day you'll find my P85 up for sale on ebay & TMC Marketplace. I can't afford maintenance and repair that high.

 

[ElSupreme]

I think we should let Tesla worry about their economics vs. quality control equation. I'm personally very comfortable with the approach of having drive units and batteries swapped and returned to factory for repair/refurbish in controlled environment by experts with the right equipment. I suspect the economics are actually much better that way. I shiver at the thought of their service center personnel, with average tenure of ~ 2 months, dissecting a drive unit. Back in the day, any idiot (including me) could torque a spark plug, replace cap and rotor, even adjust timing. Not sure that is or should be the case with a sealed drive unit.

I don't think you got it. I would fully suspect the economics work out for Tesla. But when I am out of warranty I sure as hell am not paying for a new drive unit, when I just had a piece in the differential fail.

I am not paying for new power electronics. I am not paying for a new motor. Tesla needs to figure out how they will charge me a reasonable amount. Because people's cars are going to start dropping out of warranty pretty quickly now.

 

[EarlyAdopter]

Hi all,

We all know that Tesla service is great: They have replaced drive units, batteries, door handles etc. on a lot of cars, probably because of early production issues.

While this is great for us owners, I wonder if they have properly factored in that cost into their calculations? They certainly didn't expect to have to replace hundreds of drive units, and those plus the associated labor are not cheap...

snooper77

They have. It's under "warranty reserves" in their earnings statements. They reserve a few thousand dollars per car sold in a pool for warranty repair costs. They reduced the amount held per car sold last quarter, yet the pool amount grew. This suggests newer cars are needing fewer repairs.

EDIT: I went and checked the 2013 annual report for the numbers. Specifically, in 2013 they accrued $61M in warranty reserves and incurred $21M in warranty repair costs and expenses. Coupled with the balance of $13M they started 2013 with, they ended 2013 with $53M in warranty reserves.

 

[tomas]

I don't think you got it. I would fully suspect the economics work out for Tesla. But when I am out of warranty I sure as hell am not paying for a new drive unit, when I just had a piece in the differential fail.

I am not paying for new power electronics. I am not paying for a new motor. Tesla needs to figure out how they will charge me a reasonable amount. Because people's cars are going to start dropping out of warranty pretty quickly now.

Gotcha, agree paying full retail for new one after warranty would be pretty nasty. I suspect the approach will be you get reconditioned unit for less than new one, less some mile prorated trade-in value on your old one. That's what they're talking about with batteries. So far, it has seemed that on the service side Tesla has erred on the side of providing more, not less, so they've earned benefit of doubt from me. I don't think they'll be unreasonable, it would not be in their best interests to do so.

 

[AmpedRealtor]

Hi all,

We all know that Tesla service is great: They have replaced drive units, batteries, door handles etc. on a lot of cars, probably because of early production issues.

While this is great for us owners, I wonder if they have properly factored in that cost into their calculations? They certainly didn't expect to have to replace hundreds of drive units, and those plus the associated labor are not cheap...

snooper77

Check out the earnings tomorrow and compare their warranty expenses to the industry average, and there is your answer.

Regarding drive unit replacements, Tesla doesn't eat that cost. The motors and inverters are not manufactured by Tesla. Per my service manager, all defective drive units are shipped back to the original manufacturer. Tesla has a warranty on its side from the manufacturer of these drive units, so the cost to Tesla is only for labor, shipping, and storage of these components. When one of the units is returned, it goes back to the manufacturer who either repairs or replaces it free of charge for Tesla.

 

[vgrinshpun]

Check out the earnings tomorrow and compare their warranty expenses to the industry average, and there is your answer.

Regarding drive unit replacements, Tesla doesn't eat that cost. The motors and inverters are not manufactured by Tesla. Per my service manager, all defective drive units are shipped back to the original manufacturer. Tesla has a warranty on its side from the manufacturer of these drive units, so the cost to Tesla is only for labor, shipping, and storage of these components. When one of the units is returned, it goes back to the manufacturer who either repairs or replaces it free of charge for Tesla.

Models S Drive Units, including PEM and motor are manufactured by Tesla. This was mentioned multiple times in various interviews, including Tesla CTO JB Straubel. They even have an anecdote about the motor design. Tesla was working with electric motor manufacturers to design and built the motor to their specifications, and every one of them said that it is not possible. After each response like that Tesla would approach a manufacturer again with the suggestion on how to fix the perceived problem, only to learn about additional reasons why it can not be done. After few iterations, they concluded that they essentially designed the motor for themselves, and decided to build motor in-house.

The drive unit is their core IP, it is manufactured in-house.