New CPO Warranty program - 2 years up to 100K miles

[raphy3]

wow. they are also mixing in cars with the old warranty with this new warranty. Just looking around, it looks like the higher mileage cars and the older (2012 early 2013) cars are priced to really move. As you get higher in the VIN, the price starts getting steeper quickly, and then you get into old CPO warranty territory. So is the idea that past a certain number of miles or age they convert the warranty to two years instead of the old 4? Or are they phasing out the 4yr CPO warranty altogether?

I'm confused for my part and don't know whether to be mad that I didn't have so many options for cheap cars back when I was looking (some $10k cheaper than what I paid), or to be happy that I got one with the 4 yr warranty. It's nice to have options, but they really need to introduce some consistency into their business model and stop expecting people to treat it like a cell phone (better deal, better phone comes out 10 min after you bought yours, upgrade in a year). This glut of high mile cars and weird warranty bifurcation is a result of them not wanting external dealers to sell teslas, among other things. sure, plenty of external dealers sell used ones, but they are avoided in favor of Tesla's more expensive CPOs.

 

[HankLloydRight]

So is the idea that past a certain number of miles or age they convert the warranty to two years instead of the old 4? Or are they phasing out the 4yr CPO warranty altogether?

Yes, no.

They had a growing fleet of older, non CPO cars accumulating, and they had to find a way to sell them off at a small profit (maybe). I don't think they are phasing out the standard 4-year CPO warranty. It's just more cars for sale with more options for people with smaller budgets.

 

[dhanson865]

I don't even want to know how low they were offered on trade-in for Tesla to sell them at these prices.

Keep in mind Tesla may have enabled features (Autopilot if it is new enough) or refurbished the car in some way (replace tires, replace scratched parts, simple stuff). Some of these may have been very cheap trade ins, some got almost exactly what they are selling for very little mark up.

 

[Max*]

I have come to realize that my "high mileage" car is now worthless

 

[whitex]

I would bet a pretty penny most were bought by Tesla under the Resale Value Guarantee program. So 50% of base, 43% of options and a deduction of 25ct for every mile over 15k/year. Likely not very far off from what Tesla is asking for the car today.

Resale Value Guarantee was for 3 year old cars only. Most of these high mileage cars are older than 3 years, so,I guess you're making a pretty safe bet they bought a 4 or 5 year old cars at a less that what their 3 year old value would have been guaranteed at.

 

[whitex]

I'm confused for my part and don't know whether to be mad that I didn't have so many options for cheap cars back when I was looking (some $10k cheaper than what I paid), or to be happy that I got one with the 4 yr warranty.

I recommendation is to go with "happy", as "mad" isn't going to get you anything but possibly an ulcer. You got what you agreed to pay for, why on earth have a problem with that. Welcome to a free market. Ever buy stocks?

... they really need to introduce some consistency into their business model and stop expecting people to treat it like a cell phone (better deal, better phone comes out 10 min after you bought yours, upgrade in a year).

Why do they need to do that? First, they don't control the market, so if the market is selling high mileage Teslas for less and they have a stock of them, they need to sell at a market price (a price where they will move). Maybe it would make you as a recent buyer feel better, but not the stock holders who are looking at all that locked up money for inventory that is not moving and depreciating while aging. There is nothing inconsistent about a business model that prices cars at market value.

Full disclosure, I bought a 60 before the 75's got discounted. I have no problem with that whatsoever. Yes if I waited I could have gotten a 75, but who cares. I paid to upgrade to 75 when the price dropped to acceptable levels, but have no problems whatsover with Tesla's pricing policies. I made a deal for a car, got exactly what I agreed for at the price I agreed for. What they sell cars after that is none of my concern.

This glut of high mile cars and weird warranty bifurcation is a result of them not wanting external dealers to sell teslas, among other things. sure, plenty of external dealers sell used ones, but they are avoided in favor of Tesla's more expensive CPOs.

Your argument seems to contradict itself, if plenty of dealers sell use Teslas but people are avoiding those and prefer to pay more to Tesla, why would Tesla start selling for less?

Also, unlikely Tesla cares if dealers sell their cars as they have worked with dealers many times before, selling off batches of older cars at wholesale prices to vroom and others. What might have happened here is they realized they can re-use their CPO infrastructure to make more money on those car by selling it themselves rather than selling them wholesale.

 

[HankLloydRight]

I also have another, add-on theory -- the more of these older 2-year/100k mile warranty cars they can sell and get back on the road, the quicker they can get these cars into a phase where they can charge for repairs and help the Service Centers be less of a cost-center (although not a profit-center as EM has mentioned). Just less of a total cost sink as it is now.

 

[whitex]

I also have another, add-on theory -- the more of these older 2-year/100k mile warranty cars they can sell and get back on the road, the quicker they can get these cars into a phase where they can charge for repairs and help the Service Centers be less of a cost-center (although not a profit-center as EM has mentioned). Just less of a total cost sink as it is now.

I think SC's will have their hands busy, especially with M3's coming. The cost of fixing cars under warranty should be factored into the car price in the first place. Just because SC's are part of Tesla doesn't mean they shouldn't be internally billing corporate for warranty fixes, as if they were a non-profit 3rd party shop. Unless of course your theory is that SC's have idle time they need to monetize.

 

[raphy3]

Why do they need to do that? First, they don't control the market, so if the market is selling high mileage Teslas for less and they have a stock of them, they need to sell at a market price (a price where they will move). Maybe it would make you as a recent buyer feel better, but not the stock holders who are looking at all that locked up money for inventory that is not moving and depreciating while aging. There is nothing inconsistent about a business model that prices cars at market value

It's pretty simple. They have held on to these for a while in order to make sure the prices of lower milleage CPOs remained high. None of this is going to fly with the kind of market that Model 3 is aimed at. When that is selling en masse, theyre going to have to change their tune a bit. Why would one want to have a business model that is not constantly in flux and confusing to potential customers? Because you don't want to confuse and disappoint potential customers.... Look at the situation with "antiselling" with Model 3. Look, I like Tesla, but that's amateur hour. This kind of problem can be easily avoided. Eventually main stream customers are going to feel that Tesla is holding back on each deal, which it can do given the asymmetry of the interaction. They control all of the information. And actually they do a pretty good job of controlling the market and prices despite your claim. That is the point of their cpo program and it is the whole point of not being able to buy an extended warranty on a car sold by a third party.

You got what you agreed to pay for, why on earth have a problem with that

Actually FTR I did not get what I paid for, and am working on fixing this so that I can be happy about it. So your point is moot. My P85 doesn't accelerate as promised and doesn't do 0-60 within spec. I definitely want to like this car and to like Tesla, so let's hope they resolve it.

Full disclosure, I bought a 60 before the 75's got discounted. I have no problem with that whatsoever. Yes if I waited I could have gotten a 75, but who cares.

How you personally feel about your dealings with Tesla isn't my concern or the concern of virtually anyone else doing business with tesla, but thanks for your incredibly defensive opinion. You clearly read my post that was merely thinking aloud as some kind personal attack (or as a good proxy: an attack on tesla).

 

[whitex]

It's pretty simple. They have held on to these for a while in order to make sure the prices of lower milleage CPOs remained high. None of this is going to fly with the kind of market that Model 3 is aimed at. When that is selling en masse, theyre going to have to change their tune a bit. Why would one want to have a business model that is not constantly in flux and confusing to potential customers? Because you don't want to confuse and disappoint potential customers.... Look at the situation with "antiselling" with Model 3. Look, I like Tesla, but that's amateur hour. This kind of problem can be easily avoided. Eventually main stream customers are going to feel that Tesla is holding back on each deal, which it can do given the asymmetry of the interaction. They control all of the information. And actually they do a pretty good job of controlling the market and prices despite your claim. That is the point of their cpo program and it is the whole point of not being able to buy an extended warranty on a car sold by a third party.


Actually FTR I did not get what I paid for, and am working on fixing this so that I can be happy about it. So your point is moot. My P85 doesn't accelerate as promised and doesn't do 0-60 within spec. I definitely want to like this car and to like Tesla, so let's hope they resolve it.


How you personally feel about your dealings with Tesla isn't my concern or the concern of virtually anyone else doing business with tesla, but thanks for your incredibly defensive opinion. You clearly read my post that was merely thinking aloud as some kind personal attack (or as a good proxy: an attack on tesla).

First, sorry you feel you didn't get what you paid for. Not because I want to defend Tesla, but because you are not likely to get the full "spec 0-60" etc - trust me, people with new cars (myself included) couldn't get the advertised specs like quarter mile time or 691hp for P85D, and got nowhere. Knowing you didn't get what they sold you eats you up inside but gets you nothing, so I decided I'll live with my barely 500hp (after paying an extra $5K) and be happy - life is too short. I did learn however from my prior disappointments, the next car was S60D with no EAP of FSD - I got that on purpose knowing I am actually getting a bigger than advertised battery and won't be sitting disappointed about EAP or FSD shortcomings or lack of progress. Other than rain sensing wipers and functional blind spot detection, they delivered! Not likely to buy any bleeding edge, or future "coming soon but pay now" features from Tesla again. In your situation, as a CPO the car is not guaranteed to produce the spec power, so in your case you have even less claims - this is true for used ICE cars too btw. My suggestion would be to just enjoy the car and remember when buying the next one.

All that said, the above is a tangent, you main complaint seems to be that you think they held onto a fleet of cars, therefore constraining in order to maximize revenue and profit. That is what a business is supposed to do. Funny how people don't freak out and demand to pay more when prices go up (happened with CPO's too, not just new). I think you said it best, so I'll just conclude this with your own words:

How you personally feel about your dealings with Tesla isn't my concern or the concern of virtually anyone else doing business with tesla.

 

[essmd]

Reviewing these vehicle and prices supports my fear that the resale value on a Tesla, especially those equipped with HW1 have greatly depreciated in value.

So for all of the 2016 HW1 owners, especially that took delivery prior to the upgraded hardware conversion really took a hit.

I guess this possibly affects a Tesla more than other cars due to the Tech factor...

 

[whitex]

Reviewing these vehicle and prices supports my fear that the resale value on a Tesla, especially those equipped with HW1 have greatly depreciated in value.

So for all of the 2016 HW1 owners, especially that took delivery prior to the upgraded hardware conversion really took a hit.

I guess this possibly affects a Tesla more than other cars due to the Tech factor...

Actually, I think people way overestimate the value of AutoPilot, 1 or 2. Once AP3 is our, AP1 or AP2 won't make any difference. I am assuming the pipe-dream-FSD will not happen (it will be delivered, but no way it will do "ride hailing" and other stuff Tesla implies), and if you do think it will, I say take the money you saved on AP2 vs. AP1 (AP1 costed $2,500, FSD costs $8000, so $5,500 difference) and invest it in TSLA - if they really make true FSD happen in the next 2 years with AP2, your stock value will help you get a much better car.
Some data supporting AP in a CPO doesn't have as much value as people think: Compare these 2 cars:
85 kWh Model S 5YJSA1H13EFP51899 | Tesla
85 kWh Model S 5YJSA1H12EFP53790 | Tesla

They are similar age, similar mileage and identical options, except one has AP1 and one has no AP (they are probably just before and just after AP1 was introduced). People were so screaming how much their car non-AP car value took a hit when AP was introduced, yet, at the 3 year mark (which is not an unusual duration which people keep cars), there is no noticeable difference in CPO price. The one with AP btw is listed for $2,000 less, which is probably to account for the fact that it has 3,500 more miles on it, so 3,500 miles seem more valuable than AP. A 3 year old AP2 car will not be much more valuable (if at all) than a 3 year old AP1 car.

 

[raphy3]

Knowing you didn't get what they sold you eats you up inside but gets you nothing, so I decided I'll live with my barely 500hp (after paying an extra $5K) and be happy

OK that's interesting. But really, there are a few stages to go through before arriving at this point, and I am at stage one, asking the company to explain to me how I can get back to spec. In my case it is even more interesting because the first day and a half it drove very differently, and I'm asking them if they can tell me what changed. I'm holding out hope for a simple setting or something. Regardless of the spec, I'm just trying to get it back to how it drove when I left the lot. At any rate, you can eventually be zen about it as you describe but you owe it to yourself to make all possible efforts to get them to fix it first. You don't want to get walked all over, for instance.

All that said, the above is a tangent, you main complaint seems to be that you think they held onto a fleet of cars, therefore constraining in order to maximize revenue and profit. That is what a business is supposed to do. Funny how people don't freak out and demand to pay more when prices go up (happened with CPO's too, not just new)

I get your POV, but the issue is more complicated. Tesla actually has very little competition. Despite the tiny electric car market, tesla has a virtual monopoly within this small space. It's clear to me that the market for Teslas doesn't behave like the rest of the car market. When the main stream users come in this summer some of them aren't going to like the differences in how the market operates. That's basically my only point. However thank you for telling me I said it best!

 

[schonelucht]

Resale Value Guarantee was for 3 year old cars only. Most of these high mileage cars are older than 3 years, so,I guess you're making a pretty safe bet they bought a 4 or 5 year old cars at a less that what their 3 year old value would have been guaranteed at.

Sorry, I didn't mean that they were bought under the price. But that they were bought as part of the program at the end of their 3 years old cycle (at exactly the price guaranteed under that program).

 

[Buster1]

I'm confused by this new warranty. Isn't it worse than before?

The CPOs I've been shopping came with remaining 8 yr batt warranty, and a new 4 yr / 50k warranty. I'm hoping to have my Tesla for 5-7 years.

Help me understand.

 

[schonelucht]

First, they don't control the market, so if the market is selling high mileage Teslas for less and they have a stock of them, they need to sell at a market price (a price where they will move).

Actually, Tesla does control the market. They currently openly have nearly 1% all model S's ever built as CPO. That's enough to control the market in my opinion. There is a very simple explanation why Tesla managed to capture that market : last quarter, Tesla losses on the CPO program were over $10M. That's a pretty nice chunk of money to buy market share. The reason for that is also simple (and rational), see below.

Maybe it would make you as a recent buyer feel better, but not the stock holders who are looking at all that locked up money for inventory that is not moving and depreciating while aging. There is nothing inconsistent about a business model that prices cars at market value.

False. To the shareholder, the losses on keeping that money 'locked' up are minimal compared with the losses Tesla potentially has to take on outstanding liabilities for cars still out there covered by the RVG and leases. Especially because the money isn't really locked : formerly the warehouse credit facility, and today the asset backed line allow Tesla to borrow cash against their inventory. At a very favourable rate. So the real cost of keeping 1000 of these cars as inventory on the books is likely a few million. Mousenuts esp compared with the outstanding liabilities ($2.7B)

 

[DMan]

All these EV's are like cellphones and computers. Eventually, no one will want a Blackberry or 1st gen iPhone or Commodore 64 because the technology is too outdated and not supported.

 

[viperboy]

Can someone confirm the "new" warranty on these cars for me? The way I understand it, the vehicles under the new CPO (two year / 100k miles) are covered "bumper to bumper" until your car reaches 100,001 miles or two years from the date of purchase. So if you buy the car and the door handles break in 6 months, you're covered as long as you're under the 100k mileage.

These vehicles should also keep the drivetrain warranty - the original 8 year unlimited miles, right? So a 2014 car would be covered through 2022 for battery and drive unit issues no matter the mileage?

 

[Az_Rael]

Can someone confirm the "new" warranty on these cars for me? The way I understand it, the vehicles under the new CPO (two year / 100k miles) are covered "bumper to bumper" until your car reaches 100,001 miles or two years from the date of purchase. So if you buy the car and the door handles break in 6 months, you're covered as long as you're under the 100k mileage.

These vehicles should also keep the drivetrain warranty - the original 8 year unlimited miles, right? So a 2014 car would be covered through 2022 for battery and drive unit issues no matter the mileage?

You should read the warranty document linked on the cars if you really want to know for sure. I checked it against the old CPO warranty and it was the same. It addresses the battery and drive unit warranty as well. (They dont change)

 

[Zaphod]

I'm confused by this new warranty. Isn't it worse than before?

The CPOs I've been shopping came with remaining 8 yr batt warranty, and a new 4 yr / 50k warranty. I'm hoping to have my Tesla for 5-7 years.

Help me understand.

Of course it is "worse". But, these cars are most likely considerably cheaper than the ones you have been looking at too. These are mostly older, higher mileage that were most likely in the loaner fleet that are now selling for significantly lower prices.

They still have plenty of cars with the 4 year/50K mile warranty, but those are mostly newer, lower mileage cars.