That the battery fails to charge, maintain a charge, or power your car. Or you have a sudden loss of capacity. There is no magic range number that they replace the battery at. (There is no gradual capacity loss warranty on the S&X.)
When the battery fails and you get a replacement...can you dictate that the replacement be a V3 battery? Or can they give you a remanufactured V1 say?
The warranty only states that they will give you one with the same or more energy capacity than yours had before failure. (Our something to that effect.)