Model S Service Contracts - the poll edition(tm)!

[FlasherZ]

Not going to debate the law here, but just so it's understood, you should probably read Magnusson-Moss if you want to try and claim it. The warranty on the Tesla Model S is a new vehicle _limited_ warranty and is "conspicuously designated" as such, therefore it is not subject to the federal definition of a "full warranty". The warranty documents that I have seen so far from Tesla do spell out the terms and the requirements of the consumer with regard to the warranty. Tesla *can* dictate the proper maintenance schedule that must be followed to preserve the warranty; even IF it were a "full warranty", M-M explicitly exempts manufacturers where the consumer failed to perform reasonable and necessary maintenance.

Tesla is NOT permitted to require branded parts to retain the warranty, but Tesla CAN require you to use their approved service facilities only for *warranty* repair (other state laws may apply, but M-M does not restrict this).

Tesla isn't stupid. You don't spend $700M to develop a vehicle then fail basic contract and warranty law, especially given the new nature of the technology beneath. I'm sure they have their i's dotted and t's crossed and zero's slashed, and they even use the little stroke through the center of the "7" to distinguish it from the "1".

 

[strider]

Think about why Roadster owners aren't complaining about the service fees. Why is that?

Because there's actually stuff for Tesla Service to DO with a Roadster. They have to pull and clean the PEM, they have to check and re-torque Lotus' complicated chassis bits, the battery mgmt system is less advanced so they have to physically hook up a laptop to pull data and run advanced diagnostics and balancing. There's real work there that needs to be done to keep the car running so I'm willing to pay for that.

W/ Model S, the PEM is liquid cooled, the chassis should be less adjustable since it's a sedan and not a "race car", and the 2nd generation BMS should be able to do all the battery stuff over the air. The blog says they will spend "several hours" with your vehicle - So what the heck are they doing? Tell me why a car that is "...by design a low-maintenance vehicle" needs HOURS of maintenance every 12,500 miles? That's what we're upset about. Show us what we're getting for our $600.

 

[brianman]

The blog says they will spend "several hours" with your vehicle - So what the heck are they doing?

Installing the second motor in the frunk while nobody is looking, all in preparation for the big "surprise!" unveiling on your birthday.

Hopefully at least one person can muster a chuckle amidst the drama recently.

 

[jimbakker666]

I'm sure they have their i's dotted and t's crossed and zero's slashed, and they even use the little stroke through the center of the "7" to distinguish it from the "1".

lol nice

 

[AustinPowers]

What in the US is different from Europe that you guys need a 5k maintenance and my BMW here is at 300 € per 30.000 km / 2 Years? I dont geddit.

+1 on that.

I don't understand that either. How on earth do people in the US mistreat their cars (do they at all?), or how bad must roads / oil quality / build quality / service quality etc. be that you have to have such a lot of (expensive) services at such short intervals??

Someone said he changes the wiper blades several times a year. WT*? I had to change my first set of wipers after 6 years! And we get a lot of heavy rain / snow etc. here, sometimes even combined with Sahara dust blowing over from over the Mediterranean! So don't tell me something about bad weather or wear and tear. Unless you drive through hurricanes and tornados on a monthly basis, how can your wiper blades get worn so easily? Then again, mine didn't cost 10$ a set but more around 45$, but I don't think that will be what makes the difference.

- - - Updated - - -

...The more I read, the more I understand that Tesla intends on just milking customers... for 3G access, for maintenance, etc.

If they're that laisez fair with maintenance, how much will they charge for super charging? Battery upgrades? As a monopoly they've got us over a barrel unfortunately. I had hoped they intended on building their business around making cars. Instead they seem intent on both huge up-front costs and then also nickle/diming customers once in the cars. No thank you.

Somehow Tesla seems to be turning into Apple II ;-)

 

[shokunin]

What in the US is different from Europe that you guys need a 5k maintenance and my BMW here is at 300 € per 30.000 km / 2 Years? I dont geddit.

I don't either. A friend of mine is a service manager at one the large BMW dealers here in Socal. His thoughts on service in the US is due to marketing from oil companies like jiffy lube where they had all these campaigns to change you oil every 3 months or 3000 miles. Remember those commercials?

This may have made more sense on carburetor cars where you do get a lot of solvents and gas into the oil which degrades it rather quickly. With fuel injection, cleaner fuels, and synthetic oil, you really only need to change the oil every 15,000-20,000+ miles. Dealers want to keep that mentality of coming in for your 5K or 7.5K service every 6 months or so. Dealers profit from these services, so they've kept that same service schedule. Someone posted a 5,000 mile lexus service interval. My dealer keeps pushing these, even though it clearly states in the manual (at least for my lexus) that all is need is 7500 mile interval.

 

[strider]

Not going to debate the law here, but just so it's understood, you should probably read Magnusson-Moss if you want to try and claim it. The warranty on the Tesla Model S is a new vehicle _limited_ warranty and is "conspicuously designated" as such, therefore it is not subject to the federal definition of a "full warranty". The warranty documents that I have seen so far from Tesla do spell out the terms and the requirements of the consumer with regard to the warranty. Tesla *can* dictate the proper maintenance schedule that must be followed to preserve the warranty; even IF it were a "full warranty", M-M explicitly exempts manufacturers where the consumer failed to perform reasonable and necessary maintenance.

Tesla is NOT permitted to require branded parts to retain the warranty, but Tesla CAN require you to use their approved service facilities only for *warranty* repair (other state laws may apply, but M-M does not restrict this).

Tesla isn't stupid. You don't spend $700M to develop a vehicle then fail basic contract and warranty law, especially given the new nature of the technology beneath. I'm sure they have their i's dotted and t's crossed and zero's slashed, and they even use the little stroke through the center of the "7" to distinguish it from the "1".

Not sure if that was directed at me but nothing you posted contradicts what I said. You still have to get the car serviced per the manufacturer's recommendations - I never said otherwise. But I or a qualified mechanic can do that service and Tesla cannot void my warranty unless I or they broke something while doing the service. Likewise, even if I don't do the service but a door handle breaks under warranty, they have to fix the door handle because that failure was unrelated to the service (unless there's a maintenance interval to lube it and this wasn't done). And of course I'm going to use Tesla for warranty repairs, otherwise I'd have to pay for them.

As for Tesla and contract law, getting operational and support stuff like this wrong is par for the course for Tech Startups. Make the product as cool as possible and get it out the door as quick as possible is the only thing they care about. All that other ops/support stuff can wait until they are successful and have time and money. That's been my experience anyway.

 

[AustinPowers]

I never had a TDI service that was as low as $600 ($675 was the lowest). Most were over $1200 and a few were over $2000. A truly horrible car.

I wonder why TDI cars (it's not ONE car, the TDI engines are available in dozens of models from VW Up via Skoda Superb und all kinds Seat models right up to the Audi Q7 V12 TDI) are winning reliability surveys every year for almost two decades now if they are supposed to be as bad as you say - and why VW are selling ever more millions of them each year.

By the way I have driven several TDI's myself, and our current family Touran is again a (this time BlueMotion) TDI, great fuel economy and no reliability problems whatsoever. And we never had to pay even close to $600 for a service for any of our TDI cars.

- - - Updated - - -

...When you bought your last car, did you spend hundreds of hours examining every detail of how it was made, each and every option available, and place all this under a microscope to critically dissect?

Of course we spent lots of hours (perhaps not hundreds, but close) on the decision, inspecting every option, doing test drives, reading articles from test organisations like Motor clubs, comparing different models, choosing the right outlet for ordering the car, configuring our final option choices etc. etc.
We did not disect our final choice car - because we knew what we were about to get - beforehand. With the Model S we didn't know many vital details (some we still don't know, at least for the Euro-Model S) so we started disecting every bit of info Tesla threw at us.

...When you adopt technology early, you get the cool gadget and can be the first of your friends to experience it. It's part cool new toy, part bragging rights, and it's partly that you like messing around with new technology.

But this isn't a "toy" we are talking about. This for many is the family's means of transportation. Not a cool gadget, but a car that is used every day for everyday chores. Not needing gas is the only thing that makes this car different from any other imho. And now that I know it will cost me a lot more in maintenance than any ICE I ever had doesn't really make it more attractive. And not very good in the sense of "bragging rights".

 

[dsm363]

People keep mentioning $600/year which is only if you get the unlimited Ranger visits prepaid or pay one year at a time. Otherwise there is the $475/year prepaid option.

I feel this is a bigger issue once the 4 year warranty is over. If you're spending this much on a car (and especially since Tesla is the only one who could provide firmware updates and service unique parts of the car) it probably makes sense to take the car to Tesla. That doesn't mean the price shouldn't be lower, just the reality of the situation. For those that actually know how to repair their own cars, it might be different but again you wouldn't get the firmware updates from Tesla I'd imagine. Better to wait the 4 years then look into fixing your own Model S I would think.

 

[FlasherZ]

I feel this is a bigger issue once the 4 year warranty is over.

That was the gist of an e-mail I dropped to Joost de Vries yesterday. I know we have 4-8 years before we have to really have all of it nailed, but what does the model look like for after-warranty repairs? Is it the same basic model as any other car -- parts & labor with expensive, overpriced maintenance?

If you make the argument that the vehicle's simple drivetrain means it's less costly to maintain, then during the warranty period the price of maintenance should reflect that. Versus a comparable ICE, the price should be reduced. I offered a target price of $2500 for 6 years, Ranger service included (since, as I mentioned earlier, even my Chevy dealership will come pick up my car and will return it to me when finished).

As for the "new model in automotive service" that is touted, I don't see the differentiation other than the fact the service centers are not franchisees/dealers but rather company-owned instead. After warranty is up, offer me a service contract that at $600 a year, I get "all-in" service -- maintenance, parts, and repair for that cost -- and I'll jump at it (provided it's not full of exclusion holes like your typical scam-artist "service extension" policy). That would be a "new model" for me.

 

[DriverOne]

I don't have a contact at Tesla to call, AFAIK. I added a comment to their blog post.

Still loving the car, but totally disenchanted with Tesla at the moment. It's almost less about the pricing but more about the lies of lower ongoing maintenance that factored into my calculations of affordability. You have Elon in interviews claiming with the lowered costs, it's like buying a $35K car. I never believed it was *that* good a deal, but still, that notion is now completely dead.

What this means for me most likely is a drop to the 40kWh pack. I redesigned my car that way, possibly that will show up in some management numbers report somewhere.

Not looking forward to the conversation with my wife. "Honey, remember when I was pitching this as our next car, you were worried about the price, and one of the things I said was minimal maintenance costs? Yeah, well, about that..."

 

[Rifleman]

What this means for me is a drop to the 40kWh pack. Sad that EVs are no less expensive to maintain than ICEs after all What other promises are to be broken? This is very disenchanting and no way to handle customers.

I am in the same boat. I will need to either drop to the 40 kWh pack, or cancel my reservation, lease a car for three years, and come back for Gen III. I am no positive that the 40 kWh pack will meet my needs once it starts to degrade (the original promise of 160 miles range really looks to mean 100 miles daily range, when brand new). Since I drive 70 miles daily, and 90 miles once week, I am not sure that in 2-3 years a 40 kWh pack will do the job.

 

[dsm363]

That was the gist of an e-mail I dropped to Joost de Vries yesterday. I know we have 4-8 years before we have to really have all of it nailed, but what does the model look like for after-warranty repairs? Is it the same basic model as any other car -- parts & labor with expensive, overpriced maintenance?

If you make the argument that the vehicle's simple drivetrain means it's less costly to maintain, then during the warranty period the price of maintenance should reflect that. Versus a comparable ICE, the price should be reduced. I offered a target price of $2500 for 6 years, Ranger service included (since, as I mentioned earlier, even my Chevy dealership will come pick up my car and will return it to me when finished).

As for the "new model in automotive service" that is touted, I don't see the differentiation other than the fact the service centers are not franchisees/dealers but rather company-owned instead. After warranty is up, offer me a service contract that at $600 a year, I get "all-in" service -- maintenance, parts, and repair for that cost -- and I'll jump at it (provided it's not full of exclusion holes like your typical scam-artist "service extension" policy). That would be a "new model" for me.

I could see them offering service contract extension per year for maintenance and labor but not parts included. There could easily be one part that breaks in year 5 or 6 that would cost over $600 and eliminate any profit for Tesla.

I like the $2,500 for 6 years though. What your Chevy dealer does however while not unique doesn't apply to all dealerships. My local VW dealership for example only has a shuttle that picks you up and only within a defined radius. The more expensive the car the more likely you'd be to find that kind of service so that's impressive for a Chevy dealership.

 

[bonnie]

I don't doubt you......service for 2300 Roadsters probably is world class......

How's service for 20000 Model S's and 2300 Roadsters??????

Time will tell. But the fact that the number of service centers has increased by more than an order of magnitude is a good sign, don't you think? Obviously they are planning for this.

Something else not getting mentioned here - while Tesla is in the middle of a 'make or break' launch of a new vehicle, Roadster owners haven't been forgotten. Over the last year I have just assumed that we'd be left in the proverbial dust as everyone would refocus on launching the Model S. That hasn't happened. New options have come out, many more are in the pipeline and will be announced over the next few months. Not the behavior of a company who doesn't care about their customers. JMO.

 

[mnx]

I'm willing to bet that Tesla increases their base price by 1900$ for the next Model year/version and includes "free" service. Problem solved. (they will sell a few less 40kwh packs for those who can't affrord $51,800 after the tax credit...)

 

[dsm363]

I'm willing to bet that Tesla increases their base price by 1900$ for the next Model year/version and includes "free" service. Problem solved. (they will sell a few less 40kwh packs for those who can't affrord $51,800 after the tax credit...)

That would be best. They can do that for all reservations starting today and give people already with a reservation a free year or 4 years for $1,475.

 

[FlasherZ]

I could see them offering service contract extension per year for maintenance and labor but not parts included. There could easily be one part that breaks in year 5 or 6 that would cost over $600 and eliminate any profit for Tesla.

Hence the "new model" part - it would be a shared-risk model across all owners. You'd get a fully-maintained piece of equipment whose risk was borne across the entire customer base. I didn't say it was the best model for Tesla, I just reacted to statements here/there saying that this was a "new model" of automotive service. Since Cisco was brought up a number of times, this is effectively what their service contracts are. If you purchase a service contract and the gear fails even outside warranty, they will replace it via RMA. There's no "we'll look at it for free, then tell you the flubbergastor quit and it's a $2,000 part." One of the differences, of course, is that at .6% per year for a Tesla service contract (on a $100k car), that price may not cover it.

What your Chevy dealer does however while not unique doesn't apply to all dealerships. My local VW dealership for example only has a shuttle that picks you up and only within a defined radius. The more expensive the car the more likely you'd be to find that kind of service so that's impressive for a Chevy dealership.

Nowadays, it's those little things that make all the difference. Too bad the dealerships don't realize it, and it's not all that expensive. 2 20-minute round trips (takes 2 people) costs nearly nothing compared to the goodwill and time savings it generates for customers.

 

[dsm363]

Hence the "new model" part - it would be a shared-risk model across all owners. You'd get a fully-maintained piece of equipment whose risk was borne across the entire customer base. I didn't say it was the best model for Tesla, I just reacted to statements here/there saying that this was a "new model" of automotive service. Since Cisco was brought up a number of times, this is effectively what their service contracts are. If you purchase a service contract and the gear fails even outside warranty, they will replace it via RMA. There's no "we'll look at it for free, then tell you the flubbergastor quit and it's a $2,000 part." One of the differences, of course, is that at .6% per year for a Tesla service contract (on a $100k car), that price may not cover it.

Nowadays, it's those little things that make all the difference. Too bad the dealerships don't realize it, and it's not all that expensive. 2 20-minute round trips (takes 2 people) costs nearly nothing compared to the goodwill and time savings it generates for customers.

I'd guess you are right but I don't know really anything about the auto service industry but there are many on here who know a ton. I think Tesla would probably have to wait 5 or 6 years to implement something like that to see how their cars are holding up or raise the price from $475/year.

The Rangers are more highly trained and paid than someone who comes to pick up your car and they'll also travel hundreds of miles (taking an entire day) to come work on your car at your house so this is a different service model. I don't expect Tesla to reinvent everything even though their rhetoric sometimes indicates that they will. It is the small things that make a difference and assuming Tesla service stays the same, I think people will be happy with it once they get their cars. All of the Rangers I've met and service people I've talked to have been great.

 

[JakeP]

MNX, I think you are hitting the nail on the head. Recall that they built this car to a promised price of under 50K for the base model. They likely found that it cost more to design/build than they expected, and couldn't afford to include the four-year service plan in that price. This will likely be corrected on the Gen III if not the 2013 Model S. I am surprised, however, to not see something like free four-year service plan for Sigs (or even 85kWh's), with their higher costs and (one would assume) margins.

 

[bluetinc]

So I've held off on throwing my 2 cents in on this while I calmed down a bit and talked with a few friends that dont have a Tesla on order yet. Actully to be true, they came to talk with me about this after hearing about it, not the other way around, and no, that's not a good thing... So here are my thoughts:

1. One again Tesla has managed to create a major problem where one didn't exist by screwing up the delivery of the idea. It's very reminiscent of every other release of info from them, but still very very disappointing. It's reminiscent of the Netflix debacle. This really should be expected from a small silicon valley tech startup but it doesn't help them along.

2. They made no attempt to clean the message up to eliminate feelings of being locked in, scammed, and a feeling of what is the next shoe to drop especially for the 6k customers who have locked in already. Or to deal with contradictory arguments within their own pitch.

3. This managed to take a significant shine off the Tesla brand; When I have friends who can easially afford to purchase an S and a growing desire to, come to me and say, "after this I just don't know about them". Just shows how poorly this was communicated.

4. There needs to be clear guidance on the differentiation of the car warranty and these service contracts. It should be made clear that you warranty is not based on these contracts.

5. There needs to be clear guidance that the software bug fixes will be performed without these service contracts.

6. Something needs to be done about the 12.5k service interval per yearly cost. I think that simply eliminating it would be the best course, some users would be twice in a year, some would be in once in two years... I think this would all become a wash for Tesla and smooth over a good portion of this. Or make it a 20k year with two 10k inspections, but as it stands, for someone like me who drives nearly 24k a year, 1200 dollars looks bad from the get go.

With all that said, I don't think that the service plans are that bad, for a number of reasons:

A. This is a new car, Tesla's first, and they want to see it way too often to make sure they understand how things are wearing, and catch design issues. I can understand the strong desire to look over each car every 12.5k miles, as a design engineer I would to, and after some time I would expect to back this off to 20k then 30k etc. but this takes some time. How you communicate this to the public I'm not sure, I'm a proponent of strait honesty, but if that went over well politics wouldn't be what it is.

B. All in all, 475 a year for future software upgrades(note these are not bug fixes, and they are not missing items already promised such as memory for the seats and wifi), along with inspections is not unreasonable. Just ask a dealer how much a new gps maps DVD is. People just want to feel they have a choice to pass on this if they desire even if almost no one does.

C. Tesla is rolling out a massive service network and needs to be as to fund it. It does none of us any good if they don't have service centers near by, or if the expansion puts them out of business. Perhaps they could just say, we know these cost are higher than we would like but they reflect the current cost of expansion. We hope to lower these costs in the future and if we do we plan to pass these savings on to all whom have elected the 4 year plans. But then again I like honesty.

D. They have the opportunity to show they have something others can't. Perhaps touting that the car will let you know the brakes are low and need to be changed and having they system auto-send a ranger to you with new pads, or the same with windshield wipers, hey even that your wiper fluid is low. Show/Sell something new and nice to make life easier, but don't clobber the EVs are lower maintenance sales pitch you have been working on for years. With this we make your life easier pitch, then sell the service. Have people want it, rather than making them feel pressured into having to get it.


Peter