Goodwill Repairs - Do They Get Counted?

[gnuarm]

I had my fairly new model X in for repairs, the main one being the windshield which cracked in three places from the heater on a cold day. When I got the car back the repairs were no cost under warranty... except for the windshield. I asked the associate why I was being charged for the windshield explaining that it cracked because of the heater and she went to discuss this with someone. On returning the charge was waived apparently charging it off as "goodwill".

My concern is that Tesla tracks the goodwill repairs and at some point when I have some repair I don't feel I should pay for, but is much less clear cut, I won't get it because they will feel they've done enough "goodwill" for me.

Anyone have experience with this?

 

[Seattle Tom]

Goodwill is an accounting metric, not a customer profitability metric.

You don’t want to go too far down the rabbit hole, but since goodwill isn’t classified as a warranty expense short sellers believe it enables Tesla to under-reserve for future warranty work.

There is some merit to that argument from the perspective of how healthy the balance sheet is, but I’ve seen no example where that goodwill denies future work. Most of my “warranty” work has been tracked as goodwill for 18 months now.

 

[Terthen]

I had my fairly new model X in for repairs, the main one being the windshield which cracked in three places from the heater on a cold day. When I got the car back the repairs were no cost under warranty... except for the windshield. I asked the associate why I was being charged for the windshield explaining that it cracked because of the heater and she went to discuss this with someone. On returning the charge was waived apparently charging it off as "goodwill".

My concern is that Tesla tracks the goodwill repairs and at some point when I have some repair I don't feel I should pay for, but is much less clear cut, I won't get it because they will feel they've done enough "goodwill" for me.

Anyone have experience with this?

I’ve had 3 or 4 “goodwill” repairs, including upgrading my front door latches and my FWD pillar buttons on an older MX. 2 others were things like stains or marks that were left after i took the car in for another issue, so not exactly a “goodwill” even though it was billed as such. I think it’s more related to how nice the people in you SC are and how busy it is. As more model 3s get out there I think the number of goodwill repairs will go down.

That being said, I think they should have covered your windshield so not sure yours should count.

 

[cpa]

Goodwill is an accounting metric, not a customer profitability metric.

You don’t want to go too far down the rabbit hole, but since goodwill isn’t classified as a warranty expense short sellers believe it enables Tesla to under-reserve for future warranty work.

There is some merit to that argument from the perspective of how healthy the balance sheet is, but I’ve seen no example where that goodwill denies future work. Most of my “warranty” work has been tracked as goodwill for 18 months now.

I think you are correct in this regard. Tesla's software for their Service Centers might only allow between warranty work (no charge to the customer) that directly affects the liability on the balance sheet and actual charges for service. This "goodwill" category is the middle ground for repairs that fall outside the scope for Tesla's warranty repairs because there might not be a code written into the software that permits said repair to be a warranty repair. So, the Service Manager gets to use his discretion in not charging the customer. Whether this judgment call is grist for the short sellers or external auditors is anyone's guess. It seems to me that if selected service centers are not real busy, or if this goodwill repair is a quick fix, the additional costs to Tesla would be immaterial. They are paying their mechanics whether they are working on cars or not. And given the markup of automobile parts from manufacturer to wholesaler to retailer to customer, Tesla's costs for many replacement parts may very well end up quite immaterial on these goodwill repairs.

When we first purchased our S in 2014, service centers were not very busy. I had a couple of tire rotations done that were charged off to goodwill.

 

[gnuarm]

That being said, I think they should have covered your windshield so not sure yours should count.

I assume you mean they should have covered it under warranty work? Yes, I agree. But if it won't have any practical impact on me, I guess I shouldn't worry.

 

[Terthen]

I assume you mean they should have covered it under warranty work? Yes, I agree. But if it won't have any practical impact on me, I guess I shouldn't worry.

Yea that’s what I meant, sorry! Hope your repairs were done quickly!

 

[gnuarm]

Yea that’s what I meant, sorry! Hope your repairs were done quickly!

No complaint there. In one day and out the next. It does require a significant drive to the service center, but I got to drive a model S for the day. It could have been a bit sticky if they needed to keep the car until Monday. I would have been out of state and unable to return to swap cars then and I expect they would have charged me for the loaner by the day. We'll see how it goes on the next visit.

 

[tpham07]

i doubt it. i highly doubt that "sorry we were gonna fix this problem for you for free but you already got a freebee years ago, so u pay!"

 

[bhzmark]

I see that a hack at InsideEV tries to make something of this issue and even links to this thread. New Tesla In Need Of A Repair? Check If It Was Marked Goodwill

I say hack because the article offers only baseless speculation that a notation on an invoice trumps the accounting policy. A mere notation on invoice doesn't tell us anything about how the costs are reflected on the financial statements.

BTW the only time "goodwill" shows up in the FSs is in the context of the totally different and normal context of goodwill accounting for cost of purchased assets above the net tangible asset fair market value.

 

[ThomasD]

Tesla is still paying for the labor and parts. So it is still costing Tesla money as if it were warranty work