Extended Warranty Price Increase

[PeterK]

If there's nothing that can to wrong then I wonder where does the negative margin come from? Doesn't seem like particularity good advertising to me...

Could be that they're actually offering the extended warranties "insured" through a third party, and the price they're paying is higher than expected. Or that service overall is negative margin (lots of warranty tweaks on early cars), and this plan was priced low vs. competitors so they can increase price to help close the gap.

 

[markb1]

They've announced the price change on the Tesla Bulletin Board, now:

Model S Extended Service Agreement Price Change | Forums | Tesla Motors

(Telsa Bulletin Board is the section of the Tesla forum where Tesla makes official statements.)

This part is somewhat amusing/concerning:

Tesla will continue to provide reasonable notice for changes to the base price of Model S or to a large group of options, balanced by the desire to keep unnecessary emails to a minimum.

 

[Zextraterrestrial]

They also changed the wording of it all since I bought my car!

no AutoX! didn't say that before!
Guess I won't be getting the ESA now, poopy

 

[100thMonkey]

What really gets me is that I've wanted to buy it from day one, would scoop it up today if I could but for some reason they are still holding out on us up here in WA state! they need to make the price retroactive for the states that are locked out for now because of simple admin issues with applications and such!

Ok, just checked the service plan section of the website...now says it will go up on July 3rd:

Tesla Service | Tesla Motors

 

[markb1]

Just read ALL the posts about owners claiming warranty for everything... It's horrifying (from a business standpoint) to imagine how much they are bleeding just from the "reported" posts on TMC... And I'm talking about all those cosmetic, mundane stuff when there's nothing structurally wrong with the car!

Like I said earlier, it's clear from the get-go that they're losing money based on all the "reports"..

As an example: I paid for the car, and i deserve glass vanity mirrors. Brought car in to get service to change the plastic mirrors to glass ones. Oh the horror (to the accountant... especially looking at the amount expended for labour costs for what is a less than $5 part cost)

That stuff is being covered under the included warranty (if it is being covered). I wonder if they are extrapolating these costs to the second four years, or if they are trying to make up losses now by selling plans that cover defects later.

 

[bhuwan]

"Tesla will continue to provide reasonable notice for changes to the base price of Model S or to a large group of options, balanced by the desire to keep unnecessary emails to a minimum."

WTF?

 

[Norbert]

"Tesla will continue to provide reasonable notice for changes to the base price of Model S or to a large group of options, balanced by the desire to keep unnecessary emails to a minimum."

WTF?

I suppose it means they won't do that for every little option when they raise the price a few dollar.

 

[mitch672]

"Tesla will continue to provide reasonable notice for changes to the base price of Model S or to a large group of options, balanced by the desire to keep unnecessary emails to a minimum."

WTF?

"Ownership" is probably getting flooded with email, because they didn't announce the price increase, that would be my guess.

 

[ChadS]

Just wondering, why are so many people interested in getting the extended warranty? [...] Are people primarily worried about the battery pack?

No, because the extended warranty (which Tesla calls an "Extended Service Agreement") doesn't cover the battery. Which makes sense, because the battery already has an 8-year warranty.

Some have speculated the costs are going up because of all the minor cosmetic fixes that people are bringing their cars in for. Current costs no doubt are, but none of that stuff is covered in the extended warranty either - there are exclusions for appearance care, corrosion, paint defects, squeaks, rattles, leaks, wind noise, brakes, suspension, wheel balancing, hoses, A/C lines, connections, fluid changes, filters, wiper blades, bright metal, sheet metal, bumpers, moldings, carpet, upholstery, paint, shocks, 12V battery and cables, bulbs, beams, glass, interior trim, seals, gaskets, plastic, framing, and vehicle transport.

And there is a $200 deductible, so that's essentially an exclusion for anything minor.

And of course there is a long list of things Tesla really shouldn't be responsible for - neglect, abuse, damage from 3rd-party accessories, theft, vandalism, riots, etc.

My question centers more around - what DOES it cover? The motor, gearbox, and electronics? I doubt anything will happen to the motor or gearbox during years 5-8. So I see this primarily as covering the car's electronics. Mind you, there are a lot of electronics in the car (chargers, inverters, vehicle control, touchscreen control, etc), and for a lot of it Tesla (with their high labor rates) will be the only place to get it fixed.

Am I missing something else important that is covered?

BTW, note that the same agreement for the Roadster is $5k for 3 years.

 

[100thMonkey]

I have a call into ownership about what provisions they will make for states that do not yet but will eventually have the option to purchase the warranty. I'll report back if I get an answer. I definitely let them know I'd be very frustrated if there was not a grace period offered for states like WA on the price increase, once purchasing is allowed.

 

[Jeeps17]

My question centers more around - what DOES it cover?

That is an excellent question...

In my case the air suspension would have been a good reason to get an ESA, but since it doesn't cover shock absorbers...

Has anyone explicitly asked Tesla ownership what the ESA does cover and received a written answer?

 

[twinklejet]

That stuff is being covered under the included warranty (if it is being covered). I wonder if they are extrapolating these costs to the second four years, or if they are trying to make up losses now by selling plans that cover defects later.

Yep that's what I meant. They definitely extrapolated the costs of all the warranty claims that have been coming in. You can just imagine the horrified looks on the guys in Tesla's Finance Department who are going over the P&L of Tesla Service...

 

[Alpha]

Do you think it's possible the abrupt price increase might have something to do with the battery swap? That is, maybe people under warranty would be covered for some yet to be mentioned benefit on that front??

I was initially torn on whether to get the extended service plan or not. I really wanted it, but have been spending far too much on Tesla and decided not to get it at this time. But now that the price is going up significantly, I feel like I better stomp on the go-pedal before I get passed!

 

[ChadS]

Has anyone explicitly asked Tesla ownership what the ESA does cover and received a written answer?

I did ask explicitly once, about 9 months ago in relation to a Roadster warranty (which appears to be the exact same document). I got a response that said they were escalating my concerns and would make some minor changes to the Roadster warranty and re-offer it later. It's still not available (at least not for me, although somebody very recently reported being able to buy one).

I never did get an answer explaining what it did cover. I was not trying to be difficult by asking the question; I just want to make sure I understand the value proposition. I've never bought an extended warranty for anything before.

 

[twinklejet]

Some have speculated the costs are going up because of all the minor cosmetic fixes that people are bringing their cars in for. But none of that stuff is covered either - there are exclusions for appearance care, corrosion, paint defects, squeaks, rattles, leaks, wind noise, brakes, suspension, wheel balancing, hoses, A/C lines, connections, fluid changes, filters, wiper blades, bright metal, sheet metal, bumpers, moldings, carpet, upholstery, paint, shocks, 12V battery and cables, bulbs, beams, glass, interior trim, seals, gaskets, plastic, framing, and vehicle transport.

Yes that is the language used in the agreement but that is not what they are doing. Like I've said (twice actually), people are bringing their cars in for these issues, and Tesla Service is HONORING it under warranty (probably out of goodwill and because EM wants Service to be GREAT)

For example, the alcantara headliner issue - Tesla unilaterally changed the material of the headliner. There was nothing in the language that said alcantara HEADLINER was specifically promised. (Alcantara yes, but no specifics on which PARTS of the interior would be covered in it) They ended up having to change each and every request at no charge even though they theoretically did not have to.

Same goes for the guys going in to service demanding (for lack of a better word) that they get glass mirrors and that Tesla covers the cost under their warranty just because...

 

[dsm363]

Grace period is now official
Model S Extended Service Agreement Price Change | Forums | Tesla Motors

 

[kendallpb]

I hope this thread moves soon to the general Model S forum. I found out in the TeslaMotors.com forum and was surprised to not find discussion here, till I unearthed this thread. ;-)

Anyway, I was very annoyed at first, then became less so...now I'm barely annoyed at all, since they've put in a few days' grace period. And now, I'm less sure that I should get the extended warranty, er, service plan. I never get such things, but was thinking this may be a good idea with a new car. On the other paw, tech usually shows it's problems early on, so by 4 years/50,000 miles...will I really be having warranty issues?! I don't know.

And I'm also not sure how Tesla can know whether they are undercharging for it. Any warranty issues they're dealing with now are under the original warranty. They don't know how things will look down the line, really--few if any people have 50,000 miles and the oldest real (not beta) Model S is only one year old. No doubt they did underprice it, but it isn't yet a negative for them--no one's had the car long enough to claim anything under the extended warranty, I mean, service plan.

Anyway, I'm totally on the fence now but we have this deadline of next Wednesday...so I'll read this thread with interest to see if a consensus appears.

Has anyone bought the extended warranty already--I mean, before this price increase reared its head?

 

[ChadS]

Yes that is the language used in the agreement but that is not what they are doing.

Agreed that is not what they are doing now, and that is affecting their costs now. But once you are past 4 years/50k miles, I very much believe that is what they will be doing (Roadster owners can confirm that), so their costs will be lower on the older cars.

 

[mknox]

Glad I caught this thread! The Canadian site is still offering it to me for $2,600 CAD which is what it had been all along. I was hoping to wait a bit before purchasing, but I guess I'll go ahead and buy it now.

 

[gr8fullee]

I noticed this same subject earlier and went to "My Tesla". I was able to buy at the $2500 price. I then noticed the blog announcement below. Hopefully everyone has seen this by now.

MODEL S EXTENDED SERVICE AGREEMENT PRICE CHANGE

nkinkaid@teslam... | JUNE 28, 2013

Tesla is offering a grace period for extended service agreements purchased before July 3rd at the previous $2,500 price. After July 3rd, the price will increase to $4,000. Extended service agreements cover the repair or replacement of parts (unless due to a collision) for an additional four years or 50,000 miles following the initial warranty expiration.
Customers who purchased agreements in the past two days at the higher price will automatically receive a $1,500 refund within one week. There is no need to contact us to receive this refund.
Tesla will continue to provide reasonable notice for changes to the base price of Model S or to a large group of options, balanced by the desire to keep unnecessary emails to a minimum.