Extended Service Agreements No Longer Transferable?

[tinm]

This change in policy goes against the spirit of all the talk that Elon used to make back in 2013 about how Model S will retain its value better than any other car. By eliminating the possibility of a transferable extended warranty, the value of my car just plummeted that much more.

I also have to wonder if this is being done as a way to stem the increasing cost to the company of the service organization, which Elon has repeatedly touted as being not a profit center for the business, unlike how service departments run at auto dealers. We don't even have mass quantities of Model X out there yet, and it seems the service centers and rangers are increasingly overwhelmed. Fees and prices keep climbing.

How they're ever going to handle Model 3 I don't know.

 

[mikeash]

I'm not clear on this, can I get a refund for the balance if I sell the car, or not? It says "you can request a cancellation and reimbursement" if I sell the car, but it doesn't say under what conditions they'll grant such a request!

This is annoying but not catastrophic if they'll guarantee you can get a refund, but completely ridiculous otherwise. And either way, it's just stupid. Who cares who owns the car? It costs Tesla the same amount of money to perform warranty repairs whether it's for the person who bought the extended warranty or a new owner. What's the motivation here?

 

[tinm]

What's the motivation here?

My theory, utterly unproven, is that Tesla's seeing a glut of 2012-2013 era cars moving on past their 50K mileage and getting sold, and that they want to encourage people in the market for a Tesla to buy new or buy CPO (more profit to Tesla) rather than buy from private seller. This is a surefire way to discourage people from buying from a private seller, seems to me. Oh, and yes, it's a completely ridiculous policy change on Tesla's part.

 

[Bimbels]

Very disappointing. We purchased our ESA in August so am I understanding correctly that it will be transferable since it was purchased before 11/15?

What is the policy at other manufacturers? Is this normal or is Tesla doing something differently with this policy?

Going forward though, it will definitely make us rethink buying the ESA for our next Tesla, unless we think we'll keep the car for beyond 5 years or so.

 

[stopcrazypp]

I don't know about extended warranties, but I know Hyundai's 10 year / 100k mile powertrain warranty is not transferable (becomes 5 year / 60k miles).

Edit: Did some digging and found most extended service agreements are transferable as long as you pay the fee and do so shortly after change in ownership.

 

[MsElectric]

Very disappointing. We purchased our ESA in August so am I understanding correctly that it will be transferable since it was purchased before 11/15?

What is the policy at other manufacturers? Is this normal or is Tesla doing something differently with this policy?

Going forward though, it will definitely make us rethink buying the ESA for our next Tesla, unless we think we'll keep the car for beyond 5 years or so.

The end result of this policy is to cause Tesla owners to loose value in their cars by making it undesirable for someone to purchase a Tesla private party. This will likely result in lowball offers for private party Tesla vehicles for sale with the argument that the buyer is risking having to pay for expensive repairs out of warranty on their own with no warranty coverage once the vehicle hits 50K miles.

With this policy change we've completely lost any desire to purchase a Tesla private party and it seems that is what Tesla wanted.

With minor repairs like door handle replacements costing $1,300 many of the price sensitive used car buyers will likely not want to risk owning a Tesla out of warranty. The problem is only Tesla sells parts and only Tesla can fix anything. So if that door handle repair becomes $2,000 what else can you do? You either need to pay whatever they are asking for the repair or give up using the feature that is broken and that's tough to do when you have an inoperable door.

 

[Jool]

Wow. If this is true, what a horrible decision. No way I would own this vehicle without a warranty. Private party sellers just got hosed :frown:

 

[Bimbels]

The end result of this policy is to cause Tesla owners to loose value in their cars by making it undesirable for someone to purchase a Tesla private party. This will likely result in lowball offers for private party Tesla vehicles for sale with the argument that the buyer is risking having to pay for expensive repairs out of warranty on their own with no warranty coverage once the vehicle hits 50K miles.

I agree totally. It's not only, do you want to spend the money on a service you might not use if you don't keep the car AND you can't transfer it - but you will have to accept that you will get less from either the dealer (because their deal is never great) OR a private buyer when it's time to get rid of it.

 

[markb1]

In this case, they are certainly not being like other car companies as no other car manufacturer I know has such draconian policies for an extended warranty (ESA).

That was exactly my point!

- - - Updated - - -

Very disappointing. We purchased our ESA in August so am I understanding correctly that it will be transferable since it was purchased before 11/15?

You and Tesla are both bound my whatever agreement you signed, which would be the ESA that was in effect at the time. You should be able to verify by logging into My Tesla, clicking Services Signup, and then viewing the agreement that's linked. I still get the old agreement when I click that link.

 

[BertL]

...What's the motivation here?

IMHO the motivation was:

• to sell more new cars, as Tesla does not make money from service (even though perhaps they should make at least a little, as I think it would cause Tesla to then do a better job stocking parts, and improve longer-term customer sat)
• Tesla was likely losing money from customers cherry-picking only asking for the more expensive services to be done for the fixed amount
• Tesla had inconsistencies cropping up as to what was and was not included with per-call vs prepaid service (lots of complaints and variations noted across threads here)
• and since Tesla had already put a stake in the ground with fixed-price annual service and provided prepay options to customers, they had to figure out a way to adapt their pricing without totally #^%}}ing off customers that already prepaid without giving them a refund. New staggered pricing still seems odd given what is being provided especially in the first year, but with a $175/hour listed labor rate (at least at the San Diego SC), perhaps that's how they roughly got to the prices they did.

 

[AmpedRealtor]

Fun times.

 

[BertL]

The more I think about this though, with all the folks jumping in, are some of the people vocalizing their displeasure here also ones that never had any intent to buy either policy? I personally budgeted before ordering, and did buy both agreements to hedge my bets on my $100K investment, and am even more glad now I did... But for others that maybe never did or would have purchased the extended agreements, what's your personal beef beyond a philosophical one? I ask because I suspect owners with extended agreements are in the minority, but I could be wrong. Maybe that would make a good poll.

 

[MsElectric]

Wow. Just, wow. I've been planning on getting the extended warranty (car at 40.5K mi) later this year not only in case car needs serious work past 50K mi, but if/when I ever sell it.

So now Tesla is presenting us 2013 buyers with a big middle finger?

Gee thanks, Tesla.

I guess they want you to sell the car to them so they can sell the car as a CPO car as they've made it undesirable to buy a Model S from a private party due to the non transferability of a warranty that has already been bought and paid for.

 

[BertL]

I guess they want you to sell the car to them so they can sell the car as a CPO car as they've made it undesirable to buy a Model S from a private party due to the non transferability of a warranty that has already been bought and paid for.

Let's be clear here. Tesla did not change base warranty terms as your reply would imply. They changed terms for their optional extended warranty and prepaid service agreements which I suspect a minority of owners purchase -- at least that's the case with Lexus, BMW and MBZ I'm more familiar with. For MS owners that purchased the agreements before this change, transferability terms remain in effect. For owners that didn't lock in the prior terms by purchasing the agreements when they had the opportunity to do so, they only have the new terms available to them.

I'm not saying non-transferability is good for customers or I like the change Tesla has made, I'm simply trying to ensure people reading this keep the facts straight.

 

[omarsultan]

Two things:

1) Extended warranty and extended service plans are not interchangeable terms. A warranty carries a lot of explicit and implied consumer protections, while a service plan can be very proscriptive on what it covers/excludes.

2) The changes to the ESA policy are not retroactive, so if you have an older ESA, its still transferable. I emailed ServiceHelpNA and this was their response:

Whatever your documents say that you signed when you purchased the vehicle and ESA, will still be what Tesla honors. Moving forward, and net ESA will not be transferable.

 

[MsElectric]

I agree and never meant to imply a change with the base warranty. My concern is really with regards to the Extended Warranty (ESA) and how I feel that is an awful policy for both owners and prospective buyers. This policy will negatively affect resale values.

 

[hybridbear]

This policy will negatively affect resale values.

Some of us (future buyers) are not so saddened by things that negatively impact resale values. If prices from 3rd party sellers fall, CPO prices will also have to fall. If you buy the car new you can still get the ESA. If you buy CPO it was never an option. If you buy an inventory car you can still get the ESA. It's not like they took it away completely.

I think Bert makes an excellent point. How many ppl who are upset about this already bought the ESA? If you have it already you have little reason to be upset because your terms are not changing. How many ppl who are upset didn't buy the ESA & didn't plan to? Then stop whining because it doesn't affect you. And those who didn't buy it, but planned to, well "you snooze you lose".


This should not be such a big deal.

 

[MsElectric]

Some of us (future buyers) are not so saddened by things that negatively impact resale values. If prices from 3rd party sellers fall, CPO prices will also have to fall. If you buy the car new you can still get the ESA. If you buy CPO it was never an option. If you buy an inventory car you can still get the ESA. It's not like they took it away completely.

I think Bert makes an excellent point. How many ppl who are upset about this already bought the ESA? If you have it already you have little reason to be upset because your terms are not changing. How many ppl who are upset didn't buy the ESA & didn't plan to? Then stop whining because it doesn't affect you. And those who didn't buy it, but planned to, well "you snooze you lose".

This should not be such a big deal.

I agree this is not a huge deal for you as you do not see the value in this but for an owner who many want to have the option of selling the car private party or for someone who may want to purchase a car private party with the ESA transferred this is a big deal.

 

[Gizmotoy]

Hmm. I was thinking about purchasing the ESA, but this made my decision for me. I'll probably keep the car for 5 or 6 years, which makes the plan extremely expensive.

 

[HankLloydRight]

If I'm buying a used car, I think it would actually be good to know that up until the point I bought it, it was covered by the ESA.

So if there were any issues/repairs after the factory warranty ran out, they were taken care of under the ESA. Otherwise, buying a used Tesla without having the ESA, you could be "buying someone else's problems" that you might not find out until after you bought the car. At least with the ESA, that chance is minimized, if not eliminated. So there is value there.

One could also take their car in for ESA service to fix any small nits right before selling.

I had been planning on, even before the change in terms, buying the ESA. I probably will still get it soon, possibly using some credit from the referral program.