Model 3 Warranty (North America) And Commercial / Business Use Language

[EfficientWatts]

So the Model 3 Warranty agreement was uploaded by Fred Lambert (electrek) a few days ago.

Model 3 New Vehicle Limited Warranty NA En | Arbitration | Damages

The part that was pointed out by another website (Ride-sharing? Not in a Tesla Model 3, You're Not [News] - The Fast Lane Car) was the clause around business and commercial use of the Model 3. The language used here is very similar to the new Supercharger fair use policy. Although they focused on the ride sharing aspect there's the general commercial and business use language that concerns me.

This is the section:

Warranty Limitations
This New Vehicle Limited Warranty does not cover any vehicle damage or malfunction directly or indirectly caused by, due to or resulting from normal wear or deterioration, abuse, misuse,negligence, accident, improper maintenance, operation, storage or transport, including, but not limited to, any of the following:
...
•Driving for business or commercial purposes, including, but not limited to, taxi, livery, or ride-sharing purposes, rental services, delivery services, law enforcement or emergency services

The key words indirectly and including, but not limited to in the biz/commercial clause troubles me. I get that they don't want to cover damage caused by operation of the car in a higher usage scenario, but other cars do not call out such usage specifically. (I looked at the Prius warranty text for example and there's no call out disallowing commercial and business usage; they have the general text around wear and tear and such). Also the open endness makes it look like Tesla could deny your warranty claim for issues that may arise directly or indirectly out of the following reasonable scenarios, even if the issue arises out of one of their parts having a defect:

• driving your car to the airport for business (maybe even as a one-off and not as a regular part of your job)
• driving your car as a real estate agent, showing customers houses and stuff
• featuring your car in a youtube video, and not like racing, but a regular everyday user of the car

In trying to get ahead of giant fleet operators and such, I think they're hurting legitimate uses of the car. I don't want to have to question my ability to use my car in a reasonable manner because warranty issues might arise and be denied.

I've considered driving for Uber/Lyft with this car just to check something off my bucket list. With this clause in there I cannot do so now because even the appearance of the sticker on my car would cause issues, even if I didn't use the car for that all that much as a TNC provider. And now if I have to fly out to a customer site for regular work I wonder if I can even drive the car to the airport.

The language in this section needs to clarified and/or narrowed. I can understand the TNC part (even if I disagree with it), but the rest of it I feel is frankly unacceptable.

 

[omgwtfbyobbq]

Subaru, Kia, and I think Hyundai have similar language in their new vehicle warranty.

Vehicle Warranty | Subaru of America

My feeling is that the language is intended to exclude damage or malfunction associated with commercial use that diverges substantially from personal, family, or household purposes, not to exclude coverage just because something happens to fail when someone is riding for Uber, or renting their car out.

This New Vehicle Limited Warranty does not cover any vehicle damage or malfunction directly or indirectly caused by, due to or resulting from [...] deterioration, abuse, misuse,negligence, accident, improper maintenance, operation, storage or transport, including, but not limited to [...] Driving for business or commercial purposes, including, but not limited to, taxi, livery, or ride-sharing purposes, rental services, delivery services, law enforcement or emergency services.

In CA, I think a car is only considered a commercial vehicle if you use it primarily for Uber/Lyft/etc... At least that's how the California lemon law is applied, and apparently it may even cover some commercial use.

Important Lemon Law Definitions from Law Offices of Rene Korper, CA Lemon Law Attorneys serving San Fernando Valley

Last but not least, just because a manufacturer puts something in a warranty doesn't mean it's legal. They have the usual disclaimer about the warranty restrictions being superseded by local law if applicable, and it's up to them to prove something fails based on some excluded use, modification, and so on...

 

[cartwright]

Seems like it would also exclude Turo

 

[EfficientWatts]

Thanks for the example. It is interesting to note that Subaru uses softer language, as they don't use the word "indirect" and offers a potential waiver option (maybe if you're a fleet operator you can work something out?). There's no such language in the Model 3 warranty.

I guess it comes down to what really is meant by commercial or business use. I assumed it to mean any (even in the tiniest bit, directly or indirectly), but at least in CA I could be wrong. It does kind of make sense as driving to/from work (if a fixed site) is not considered business use in the eyes of the tax law. It would be interesting though, if you follow that meaning, and you did use your Model 3 for part-time Uber/Lyft, how that language would be resolved if something happened.

Seems like it would also exclude Turo

Yea it sucks for them, though I guess it may already have been like that. People now have to take the risk or something happening due to the car. Eventually I think Tesla would offer explicit fleet options but right now they don't exactly need to be looking to do fleet sales. Either Turo is going to have to offer additional coverage options or people will just have to take that risk.

I wonder if the Model S/X have different warranty language, since there are more likely to be fleet operators of those cars now...

 

[omgwtfbyobbq]

My guess is that Subaru will deny coverage for anything outside of normal use that indirectly or directly causes damage/etc, but they don't need to include that in the warranty language since it's in already in the Magnuson-Moss Warranty Act (MMWA). I wouldn't be surprised if whoever drafted this at Tesla isn't as experienced as whoever wrote/updated the warranty terms for other large manufacturers.

Magnuson–Moss Warranty Act - Wikipedia

The federal minimum standards for full warranties are waived if the warrantor can show that the problem associated with a warranted consumer product was caused by damage while in the possession of the consumer, or by unreasonable use, including a failure to provide reasonable and necessary maintenance.

My feeling is that we can use the car for Uber/Lyft/Turo/Etc.. without invalidating the warranty as long as that use is similar to what a reasonable person would consider to be personal, family, or household use.

For example, if I mostly use the car as an Uber driver and spend 8 hours a day driving up and down hills in SF in heavy traffic, I could see Tesla denying warranty coverage for the battery, brakes, or something else that would be hit harder by my relatively extreme use. If I'm driving the same routes I usually do and also use my car for Uber on those routes, my guess is I would be fine. The same likely applies to Turo as well, and by that I mean that normal rentals on their site are for personal, family, and household use, not business use. They have a separate URL for that.

Turo for business

Last but not least, just because Tesla has something in their warranty, or even if someone at Tesla confirms the warranty language, doesn't mean it's valid. Five years ago George Blankenship was stating that Tesla wouldn't provide warranty repairs if someone didn't have their car serviced by Tesla, which does not conform with the MMWA. Tesla can only deny warranty coverage based on unreasonable use, which can include reasonable and necessary maintenance, and as far as I know no one in the past few years has been denied coverage just because they didn't pay for Tesla to service their vehicle

@DR CHILL: “What will happen to Tesla owners that do not pay for these annual inspections from Tesla? Can they take their car to an independent shop without affecting warranty coverage?”
You will forfeit your warranty if you do not do Annual or 12,500 mile Inspections, when due. You will forfeit your warranty if you take your Model S to an independent shop for vehicle service and/or repairs. Your car needs to be serviced by a current, Tesla Certified mechanic to make sure it is working properly and to maintain the warranty on your car.

Warranty/Servicing - official Tesla responses (incl GeorgeB)

 

[calisnow]

Yep Turo looos like it's out. Quite surprising.

 

[Tam]

It looks like warranties from both Model S and X don't exclude commercial use and they just don't offer them an Extended Service Agreement (Extended Warranty).

It sounds like Tesla says if you want warranty coverage for commercial use, you'd better pay more for Model S and X but not for Model 3.

 

[Drax]

I wouldn’t put any stock into GeorgeB’s statements from 2012, as things have definitely changed since then. A perfect example is that annual services for S/X are not required under warranty, only recommended.

I would be shocked if warranty coverage wasn’t handled the same for 3 as it is for S/X, but I would definitely not expect to receive the same level of service for 3 owners.

 

[sjj45]

The good news is that looking at the most recent warranty document from https://www.tesla.com/sites/default/files/downloads/Model_3_New_Vehicle_Limited_Warranty_NA_en.pdf, this clause about "Driving for business or commercial purposes" has been removed from the list altogether.