San Diego Man's $58,000 Nightmare with a (Salvage Title) Tesla Model S

[brianman]

Most with over 50000 miles are out of warranty. The car is out for almost 2 years now and there are quite a few people that have accumulated enough mileage to push their cars out of Warranty.

All* owners in WA and FL that have > 50,000 miles.

* Imported owners (people that bought in another state, got the extended warranty, and then moved) are exceptions to this, I believe.

 

[eepic]

Junk has a verify specific legal meaning. It's not the same. Tesla obviously has no warranty obligations here. They also have some reasonable liability concerns if they work on the vehicle. I'm not arguing that but I am tired of the repeated people referring to this vehicle as junk, it isn't.

No this is not fear mongering it's a legitimate risk. Your back of the napkin math makes some hugely wrong assumptions about insurance.

You assume that the rate is only going to go up by the increase in risk. The higher the risk the higher the premium. Insurance companies need to make enough money so even if they pay out on an unusually high number of claims they don't go out of business. So even if the calculated risk of $5/month is accurate there's no way the rate would go up by just that much.

You do the calculation as if there is a single insurance company that insures all Model S vehicles and that they can simply spread the added cost of claims across the rates of all of them. That's not the case at all. Owners may bounce around insurance companies as they raise rates to be consistent with their claims experience, but as they bounce around eventually all of them will have experience and all the rates will be higher (there is of course considerable differences in prices I saw a difference of 5 times the lowest to highest price when I shopped).

I'm not sure how you came up with 50 vehicles out of the 40,000 fleet you assumed. You say you rounded up so I'm guessing you used a tenth of a precent and then rounded up to 50. But I'm willing to bet based on what I've seen on this forum that the totaled to claim ratio is higher for a Model S than other vehicles. I base this off the discussion of vehicles being totaled for cosmetic damage only, due to the high cost of repair work. I argued that that high repair cost combined with a low salvage value is a recipe for high insurance rates and I stand by that argument. If it was just one or the other it probably wouldn't be as big of a deal, but you can't consider just one of these factors.

You argue that the rate increase shouldn't be significant to the purchaser of a $100k vehicle. I'm not entirely convinced that all owners can easily accept the insurance increase (especially since I don't accept the $5/month increase you claim), many have said buying the vehicle was a stretch. But even if I grant you that many can absorb that cost I still don't think it's a good thing for owners.

When the Model 3 comes out the insurance rates for it will most certainly be based on the experience insurance companies have had with the S and X. If that experience is poor then the rates will reflect that. Higher rates may depress sales of the Model 3 (especially if Tesla is still in a order and wait process where people can't just impulse buy them). Tesla has bet the company on the Model 3. If it doesn't do well I don't expect Tesla to be around for long and I don't expect to be able to get parts for the Model S.

I don't think any of this is fear mongering. I'm pointing out legitimate concerns that Tesla should address. In this particular case I think both sides are being unreasonably cautious about the other. I think Tesla needs back of some of the more onerous language in their liability waiver (e.g. we won't sell you parts) and the owner needs to agree to that more reasonable set of limitations. It's best for everyone (the owner, Tesla and all of us) if Tesla resolves this in a way that doesn't destroy Tesla's salvage value.

There is a constant refrain that the guy should have looked into the situation with the vehicle. I can assure you that people buying salvage vehicles will hear about this and will stay well away from Tesla vehicles because of situations like this. I just hope it gets resolved before too much time passes because often a reputation like this is hard to get rid of. I still get asked about the fires and that was promptly resolved by Tesla.

Let me simplify my assumptions in a different manner so it's easier to understand.


1. There's been about a dozen total losses posted here on TMC in the past year or so with an average fleet size of 20k (12/20k), and conservatively estimating only 50% are posted about here we're looking at 24 total losses per 20k in one year. Assuming this scales linearly with fleet size that means 50 total losses in one year with a fleet of 40k cars. In other words, 0.125% total loss probability per year of operation of each vehicle. This is the same regardless if the insurer insures 1 car or 10,000 cars (more on this below).


2. I'm assuming with a less 'robust' legal waiver (the discussion at hand) the average salvage auction yields $50k instead of $5k. That's a difference of $45,000 in what the insurance company recovers from the salvage, an extremely generous assumption in favor of your argument. Put in perspective, the difference is more than enough to buy a brand new Model 3 from Tesla at some point.


$45,000 x 0.125% = $56.25/year = $4.69/month, which I rounded up to $5/month.


To address your claim that insurers will increase the premium margin from extra "risk"... this entire calculation is the calculation of the incremental risk to the insurer. Assuming the insurer insures more than a thousand of any cars in general (which would probably be all the ones you would consider), the risk of an outsized multi-standard deviation event (aka. bad luck) that would affect their business liquidity is pretty much zero. But fine, I'll agree they need to make money on this additional $5/month of insurance revenue. As a benchmark, it shows AllState's industry operating margin is 6.37% (Allstate Corp (ALL.N) Financials | Reuters.com ), and we'll say auto insurance may be higher so let's round up again to 20%. We're looking at $6/month instead. If your argument is that they just want to increase profitability beyond that, then they might as well do so regardless of this issue.


Of course more expensive insurance would absolutely be a negative for owners, I'm not disputing that. But arguing that a $6/month insurance increase (which realistically would be a lot less) would depress sales materially is really a stretch.


You're stating a bunch of qualitative facts then inferring drastic outcomes that the numbers clearly disprove (insurance will skyrocket vs. insurance could increase modestly). Exaggerating the potential negative outcomes is the literal definition of fear mongering.

TL;DR --> Decreasing salvage value from $50,000 to $5,000 would increase insurance by something like $6/month, probably less... far from skyrocketing.

 

[AmpedRealtor]

Just about any Model S involved in a minor accident is going to be called a complete loss...

Reality begs to differ. There have been plenty of accidents, many more serious than "minor", where the car has been repaired. There is no evidence to support such a statement.

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I'm not talking specifically about THIS case specifically. In general Tesla refusing to sell parts, not supplying information to allow 3rd party repair, and insisting on Tesla certified body shops only being able to buy parts/work on the Model S, combined with the very high repair costs, combined makes for very little value for insurance company "totaled" vehicles. And, it's going to eventually affect ALL of us, in the wallet, count on it.

I think there's a difference to Tesla between selling upper toe link bolts and selling someone a drive unit.

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Ok. Let's say I buy a fuel pump and lines from Porsche, install them incorrectly, and as a result my car catches fire.

Or let's say I buy calipers from Porsche, forget to bleed the brake system, and run down a group of nuns walking to church.

Is Porsche liable for selling me the parts?

They could be if you sued them. McDonald's once sold a very hot cup of coffee...

 

[eepic]

Ok. Let's say I buy a fuel pump and lines from Porsche, install them incorrectly, and as a result my car catches fire.

Or let's say I buy calipers from Porsche, forget to bleed the brake system, and run down a group of nuns walking to church.

Is Porsche liable for selling me the parts?

Case in point the other day: Porsche 918 Spyder burns to ground in gas station conflagration - Autoblog

Rumor has it the owner was doing something stupid at the gas station. Even if was the case that the owner had poured gasoline all over his vehicle intentionally and Porsche's system is fine under normal use, it doesn't mean there aren't dozens of media articles about this fire.

Reputational damage has already happened to Porsche, regardless of whether they are liable.

 

[AmpedRealtor]

Second, Tesla repairs vehicles under warranty for product defects, but does not repair body damage "free of charge." That's what we're discussing here--if you get into a wreck with your Tesla and want to fix it yourself, or have a shop do it that you trust but that isn't an "authorized" body shop, you appear to be SOL.

Only if you refuse to sign a waiver...

 

[JST]

Only if you refuse to sign a waiver...

No. Read the language of the waiver again, particularly section 6. It states that Tesla will *not* sell parts to the signatory of the waiver.

 

[yobigd20]

autoblog picked up the story Totaled Tesla Model S is a case of buyer beware

 

[qwk]

No. Read the language of the waiver again, particularly section 6. It states that Tesla will *not* sell parts to the signatory of the waiver.

It appears that some people on this forum cannot read, or at least comprehend.

I had a hell of a time buying the adjustable camber bolts to fix my alignment so the car wouldn't shread rear tires. It took several calls to Fremont before the Portland SC got the ok to ship the parts I needed to buy. And this is for a repair of something that should have been taken care of under warranty.

 

[JRP3]

A couple of interesting comments there:

I work in the service department for several high-line manufacturers. And no, we won't touch a salvage title vehicle, although maybe we would if we had a waiver.

Several dealers in Alabama feel the same way. Here, any rebuilt salvage car has to carry a decal declaring the car has a salvage title and has its own identification number - sort of like a new VIN number. Once a service manager sees that ID, they quickly tell them they can't repair the car,....

 

[breser]

1. There's been about a dozen total losses posted here on TMC in the past year or so with an average fleet size of 20k (12/20k), and conservatively estimating only 50% are posted about here we're looking at 24 total losses per 20k in one year. Assuming this scales linearly with fleet size that means 50 total losses in one year with a fleet of 40k cars. In other words, 0.125% total loss probability per year of operation of each vehicle. This is the same regardless if the insurer insures 1 car or 10,000 cars (more on this below).

I seriously doubt that what's been posted on this forum is necessarily a representative sample. The order spreadsheet for instance doesn't even cover anything near what you'd need to consider a representative sample versus what we know they're shipping. I see maybe 2-3 people saying they took delivery on this forum per day and I personally saw them delivery that many vehicles when I was at the service center picking mine up. Maybe you saw 50% early on but not anymore. Here's an example that I haven't seen on these forums at all: This is what it takes to total a Tesla Model S [NSFL?] : teslamotors I'd also point out that not everyone may be posting about their situation since they're probably trying to negotiate with the insurance company.

2. I'm assuming with a less 'robust' legal waiver (the discussion at hand) the average salvage auction yields $50k instead of $5k. That's a difference of $45,000 in what the insurance company recovers from the salvage, an extremely generous assumption in favor of your argument. Put in perspective, the difference is more than enough to buy a brand new Model 3 from Tesla at some point.


$45,000 x 0.125% = $56.25/year = $4.69/month, which I rounded up to $5/month.

I realize we're just talking about the salvage situation in this thread, but I think that you have to consider the totality of the repair situation with the S right now. You not only have potentially lower salvage value but an increased likelihood of a car being declared a total loss. The two issues are multiplicative with each other as to the losses incurred by the insurance company. That multiplicative effect will drive rates higher than you're assuming.

Of course more expensive insurance would absolutely be a negative for owners, I'm not disputing that. But arguing that a $6/month insurance increase (which realistically would be a lot less) would depress sales materially is really a stretch.

You're stating a bunch of qualitative facts then inferring drastic outcomes that the numbers clearly disprove (insurance will skyrocket vs. insurance could increase modestly). Exaggerating the potential negative outcomes is the literal definition of fear mongering.

You're making up numbers based on massive assumptions about the number of vehicles being totaled that neither of us have access to and then saying that your calculations prove something. If you had access to the real numbers (or at least numbers for a representative sample) then I'd agree you could prove something. You can't make up numbers and then say you have a quantitative argument.

Fear mongering isn't just exaggerating a negative outcome, it's doing so in order to influence people to change their opinion or take a specific action. The only people I want to change their behavior is Tesla Motors and the individual that own the salvage vehicle. Neither of whom are likely to pay any attention to what I'm saying here. Rather the audience here is owners, shareholders and potential owners. As an owner I have a stake in Tesla just like other owners, I have no desire for their vehicles to be less desirable and diminish the likelihood of continued service (particularly warranty). So I have no desire to diminish anyone's interest in purchasing Tesla vehicles or stock.

I have a concern, you think my concern is overblown. You're entitled to that opinion, but I don't think your made up numbers prove I'm wrong. No more than I can prove you're wrong. Neither of us have real numbers to work with.

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They could be if you sued them. McDonald's once sold a very hot cup of coffee...

Everyone loves to use the McDonald's case as an example of liability for a ridiculous situation. It's easy to draw that conclusion if you just hear the simplistic facts of the case and don't understand the full situation. The facts of the case are very different from what most people presume.

McDonald's (per corporate policy) sold coffee at a temperature that was too hot to consume (180-190 degrees Fahrenheit). They had numerous situations of people getting burned from their coffee over the years. Experts in burns had warned the fast food industry that they should not serve beverages over 130 degrees Fahrenheit. McDonald's refused to lower the temperature of their coffee to a safe temperature.

There are all sorts of ridiculous liability suits you can point to (most of them end up getting thrown out though), but that case is not a good example. McDonald's deserved to lose.

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All* owners in WA and FL that have > 50,000 miles.

* Imported owners (people that bought in another state, got the extended warranty, and then moved) are exceptions to this, I believe.

Why WA and FL?

 

[brianman]

Why WA and FL?

No extended warranty in these two states. Sucks.

 

[NoMoGas]

Yea, this first seemed like wow... bad move... till the last line... Tesla can't just keep your property... sign the waiver that and enjoy your car

 

[freds]

No extended warranty in these two states. Sucks.

But hey feel so much better with eight year battery and drive train coverage, due to artificial drawbacks to where we live!!!

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Yea, this first seemed like wow... bad move... till the last line... Tesla can't just keep your property... sign the waiver that and enjoy your car

Ah where does it say anywhere Tesla can keep it because they elect to inspect it? Sound like massive spin to me!!! All they can do is elect to not work on it because in their expert option (hey they designed and built it?) because it would take massive efforts to make it safe?

Sign the agreement because the fact is there are lawyers that are like wolfs rooming in packs to suck the blood out of anyone who has blood to sustain the pack after the blood letting???

PS. Personal experience after 25+ years of owning a business, as soon as I brought an airplane it was an asset target to entice lawyers to sue for hurt feelings....

 

[stopcrazypp]

Can a non-approved body repair center get parts from Tesla? Asking because I honestly don't know.

Body repairs do not need Tesla approval (nor does it need Tesla parts; there are shops out there that do aluminum repair and fabrication). The subject of this thread is already proof of that! He did $8000 worth of repairs without Tesla approval.

Where he is stuck is the battery pack. So it seems your point is changing the subject.

 

[omarsultan]

Ok. Let's say I buy a fuel pump and lines from Porsche, install them incorrectly, and as a result my car catches fire.

Or let's say I buy calipers from Porsche, forget to bleed the brake system, and run down a group of nuns walking to church.

Is Porsche liable for selling me the parts?

Folks, if the shade-tree mechanic thing is your thing, the Model S is probably not for you.

I am not sure if Tesla will sell you brake parts, but considering hydraulic brakes were first installed on a 1914 Duesenberg, I am pretty sure that 100 year old technology is pretty well understood and entails minimal risk. If something goes wrong, most people have enough experience with the reliability of hydraulic brakes that they would not blame the brake technology.

To follow through on my example, I guarantee you that the headline would read something like "Tesla Electrocutes Fireman" or some such foolishness and some attorney would go after Tesla for being negligent in selling parts to someone not qualified to properly service the car. As we learned during the fires, no on cares about the nuances of the scenario, no one is going to wade through 300 posts on a message board, the only thing that gets picked up and amplified is the sound bite.

 

[tga]

Everyone loves to use the McDonald's case as an example of liability for a ridiculous situation. It's easy to draw that conclusion if you just hear the simplistic facts of the case and don't understand the full situation. The facts of the case are very different from what most people presume.

McDonald's (per corporate policy) sold coffee at a temperature that was too hot to consume (180-190 degrees Fahrenheit). They had numerous situations of people getting burned from their coffee over the years. Experts in burns had warned the fast food industry that they should not serve beverages over 130 degrees Fahrenheit. McDonald's refused to lower the temperature of their coffee to a safe temperature.

<off topic>
I've always thought Starbuck's was much hotter. Just for grins, I stuck a meat thermometer in my coffee cup this morning before pushing the button on the Keurig; it read 180.
</off topic>

 

[Nubo]

Folks, if the shade-tree mechanic thing is your thing, the Model S is probably not for you.

I am not sure if Tesla will sell you brake parts, but considering hydraulic brakes were first installed on a 1914 Duesenberg, I am pretty sure that 100 year old technology is pretty well understood and entails minimal risk. If something goes wrong, most people have enough experience with the reliability of hydraulic brakes that they would not blame the brake technology.

To follow through on my example, I guarantee you that the headline would read something like "Tesla Electrocutes Fireman" or some such foolishness and some attorney would go after Tesla for being negligent in selling parts to someone not qualified to properly service the car. As we learned during the fires, no on cares about the nuances of the scenario, no one is going to wade through 300 posts on a message board, the only thing that gets picked up and amplified is the sound bite.

I'm rather disappointed by the prevalent attitude that maintenance and repair of this vehicle is reserved for the Technical High Priests , and beyond the ken of the common man. To me this seems to simply be another flavor of the FUD that is thrown against EVs in general.

Electricity has been around for awhile now. It's not magic and it's not Alien Technology. The reason why this fellow is finding it difficult to repair his vehicle isn't that he can't understand electricity/wiring/batteries/inverters but that Tesla doesn't publish the specs and procedures. And they have restricted access to themselves by virtue of proprietary communications protocols or codes.

People are building their own EVs from components: Lithium batteries, inverters, controllers, etc... They are not all PhD's or Electrical Engineers. While I appreciate the great work Tesla is doing, I think their deification is somewhat misguided.

 

[maximusa]

Okay so something doesn't add up in this story...

Doesn't someone sign their rights away (assuming all risks), when participating in a salvage auction? Didn't he evaluate the insurance forms of what exactly happened in the accident (ie battery or frame damage) and that it was immobilized from Tesla? Why was the work performed by a non-authorized Tesla mechanic, and wouldn't he of known, before paying the money, that the car couldn't be driven?

Also it seemed like he grossly overpayed for this Tesla. He payed over 58k cash when you can get a brand new one for nearly the same amount. I just visited Tesla.com and they sell the base model for $70,890 (before incentives), being in California he qualifies for the Federal AND State incentives for an EV vehicle that would equal $60,890 ($7500 minus another $2500); and this is on a BRAND NEW warrantied 2014 Tesla. Tesla also has a lease program now where you can lease for $932/month and 2,500 down. This effectively is about $699/month (with gas savings), which is approaching many peoples budget on transportation. I would say that an unknown salvaged Tesla's true marked rate would be around 25k, that way it leaves plenty of room for unknown risks and certified repairs at the Fremont factory.

So its either "A fool and his money is quickly parted", or he can drive the car but can't use the Supercharger Stations due to the non-certifications.

 

[JohnQ]

Okay so something doesn't add up in this story...

Doesn't someone sign their rights away (assuming all risks), when participating in a salvage auction? Didn't he evaluate the insurance forms of what exactly happened in the accident (ie battery or frame damage) and that it was immobilized from Tesla? Why was the work performed by a non-authorized Tesla mechanic, and wouldn't he of known, before paying the money, that the car couldn't be driven?

Also it seemed like he grossly overpayed for this Tesla. He payed over 58k cash when you can get a brand new one for nearly the same amount. I just visited Tesla.com and they sell the base model for $70,890 (before incentives), being in California he qualifies for the Federal AND State incentives for an EV vehicle that would equal $60,890 ($7500 minus another $2500); and this is on a BRAND NEW warrantied 2014 Tesla. Tesla also has a lease program now where you can lease for $932/month and 2,500 down. This effectively is about $699/month (with gas savings), which is approaching many peoples budget on transportation. I would say that an unknown salvaged Tesla's true marked rate would be around 25k, that way it leaves plenty of room for unknown risks and certified repairs at the Fremont factory.

So its either "A fool and his money is quickly parted", or he can drive the car but can't use the Supercharger Stations due to the non-certifications.

Speculating, but if it was a P+ model then the savings would have been significant. I have no evidence that it was.

 

[dhrivnak]

The issue is people should be able to work on THEIR car. Not everyone has the time, knowledge or ability but many do.

I designed and built my net - zero house. I converted my Chevy Avalanche into a plug in hybrid and was able to purchase the very detailed 3 volume 3400 page shop manual to help. I converted a Jeep Wrangler to all electric drive. It will smoke the tires has full 4 and Will go 80 miles on a charge. Again I was able to buy a shop manual to help in the conversion.

So I know MANY people are capable of such feats as I am FAR from alone.

But Tesla is blocking us and adding unnecessary steps. We can help as countless DIY have helped other manufacturers promote their products.