Tesla Extended Service Agreement (ESA)

[Jeremy3292]

Has anyone bought the ESA for their Model 3? I am usually very anti-extended warranty, but I just had to have my heat pump replaced after it failed out of nowhere one morning. Luckily I was just under warranty still at 47k miles. However, out of warranty this is a $3,000+ repair that you basically have to do to keep the car functional. No metal shavings or anything just a "fault" per Tesla. So basically a random complete failure for "no reason."

I read the entire ESA on Tesla's website and I think the exclusions are reasonable (e.g. tires/wheels, weather stripping, leaks, etc.) and not really what I am worried about failing. PCS, screen, speakers, etc. - lots of things that can fail (and have failed - see forum threads) that are expensive to replace. I also personally don't trust Tesla's quality yet.

I know it's gamble/bet at $1,800 but it's minimum $195 (hourly rate) for Tesla to even look at your car and diagnose any issues. Curious what others think about this.

 

[Adam3]

Tesla now offering extended service agreements for certain vehicles

Look what I just spotted in my Tesla app. An extended service agreement for an additional 2 years and 25,000 miles of coverage. Seems pretty reasonable although I have not shopped, given I still have two years left on my factory warranty. Thoughts?

teslamotorsclub.com

 

[Jeremy3292]

Tesla now offering extended service agreements for certain vehicles

Look what I just spotted in my Tesla app. An extended service agreement for an additional 2 years and 25,000 miles of coverage. Seems pretty reasonable although I have not shopped, given I still have two years left on my factory warranty. Thoughts?

teslamotorsclub.com

Not much substance in that thread (read it previously before posting). More just discussion that the ESA is now available/not available for my car.

 

[jjrandorin]

I know it's gamble/bet at $1,800 but it's minimum $195 (hourly rate) for Tesla to even look at your car and diagnose any issues. Curious what others think about this.

I think its no different than any other extended warranty discussion you have ever been a part of, thought about, etc.

I am usually very anti-extended warranty

You already stated you tend to not like extended warranties. Ask yourself why that is, and if something about this changes the equation. In general, you get a warranty on something because you are afraid you might not be able to afford to pay for it if it breaks, or might not want to pay for it if it breaks.

If you generally dont buy them, I am not sure what would change here. Same thing if you are one who likes to buy them (but you stated you arent).

As for "it would have been a 3k repair if outside of warranty", well, in general the idea would be to not be making car payments on a car outside of warranty. 3k on a paid for car to keep it running is $250 a month, which is less than most peoples car payment.

Just like most warranty considerations, someone would generally be better off taking the money they would spend on the warranty, + a part of the money they would be making on the car payment they are no longer making, and putting it into a "car repair" savings account. That way someone still has the money "if" it breaks to repair it, but if it doesnt break you still have your money.

Warranties are buying good feelings, or hedging against not being able to afford a repair. When I was young and couldnt afford decent stuff (cars, whatever) I bought them. Once "I" could make the decision to replace or repair something and it wasnt a financial emergency either way, i stopped buying them (extended warranties).

Nothing about this car changes that thought process, at least to me.

If I was going to buy one, however, I would probably look into the xcare one vs Tesla, since in general ones satisfaction with this type of thing stems from the customer service aspect of when you need to execute on it. Tesla is not known for that, even though I have had pretty good experiences myself with them.

 

[AZAV8R]

I think its no different than any other extended warranty discussion you have ever been a part of, thought about, etc.



You already stated you tend to not like extended warranties. Ask yourself why that is, and if something about this changes the equation. In general, you get a warranty on something because you are afraid you might not be able to afford to pay for it if it breaks, or might not want to pay for it if it breaks.

If you generally dont buy them, I am not sure what would change here. Same thing if you are one who likes to buy them (but you stated you arent).

As for "it would have been a 3k repair if outside of warranty", well, in general the idea would be to not be making car payments on a car outside of warranty. 3k on a paid for car to keep it running is $250 a month, which is less than most peoples car payment.

Just like most warranty considerations, someone would generally be better off taking the money they would spend on the warranty, + a part of the money they would be making on the car payment they are no longer making, and putting it into a "car repair" savings account. That way someone still has the money "if" it breaks to repair it, but if it doesnt break you still have your money.

Warranties are buying good feelings, or hedging against not being able to afford a repair. When I was young and couldnt afford decent stuff (cars, whatever) I bought them. Once "I" could make the decision to replace or repair something and it wasnt a financial emergency either way, i stopped buying them (extended warranties).

Nothing about this car changes that thought process, at least to me.

If I was going to buy one, however, I would probably look into the xcare one vs Tesla, since in general ones satisfaction with this type of thing stems from the customer service aspect of when you need to execute on it. Tesla is not known for that, even though I have had pretty good experiences myself with them.

For anyone on the fence, this is extremely sound advice. The best carry away from the above post is:

"Warranties are buying good feelings, or hedging against not being able to afford a repair. When I was young and couldnt afford decent stuff (cars, whatever) I bought them. Once "I" could make the decision to replace or repair something and it wasn't a financial emergency either way, i stopped buying them (extended warranties)."

RIght on target.

 

[gaswalla]

above is spot on..
from a purely financial perspective, you know Tesla and Elon have looked at all the data and put out a price for the ESA that makes it sure that Tesla comes out ahead, as they should.

 

[Jeremy3292]

I think its no different than any other extended warranty discussion you have ever been a part of, thought about, etc.



You already stated you tend to not like extended warranties. Ask yourself why that is, and if something about this changes the equation. In general, you get a warranty on something because you are afraid you might not be able to afford to pay for it if it breaks, or might not want to pay for it if it breaks.

If you generally dont buy them, I am not sure what would change here. Same thing if you are one who likes to buy them (but you stated you arent).

As for "it would have been a 3k repair if outside of warranty", well, in general the idea would be to not be making car payments on a car outside of warranty. 3k on a paid for car to keep it running is $250 a month, which is less than most peoples car payment.

Just like most warranty considerations, someone would generally be better off taking the money they would spend on the warranty, + a part of the money they would be making on the car payment they are no longer making, and putting it into a "car repair" savings account. That way someone still has the money "if" it breaks to repair it, but if it doesnt break you still have your money.

Warranties are buying good feelings, or hedging against not being able to afford a repair. When I was young and couldnt afford decent stuff (cars, whatever) I bought them. Once "I" could make the decision to replace or repair something and it wasnt a financial emergency either way, i stopped buying them (extended warranties).

Nothing about this car changes that thought process, at least to me.

If I was going to buy one, however, I would probably look into the xcare one vs Tesla, since in general ones satisfaction with this type of thing stems from the customer service aspect of when you need to execute on it. Tesla is not known for that, even though I have had pretty good experiences myself with them.

Thank you - these are helpful thoughts. The difference here stems from my lack of faith in Tesla quality vs. say my wife's Lexus with similar miles. I've driven Toyota's mostly in my life and never really was worried about a part breaking bc of their quality record, at least in my own mind. It is not a money issue so much as "hedging my bets" against Tesla's quality record. I know forums are littered with "everyone's problems and complaints" and may not reflect the actual reality of the population of Tesla's. However, my heat pump failing in line with all the other Tesla heat pump failures (many articles on this problem) has given me cause for pause and to take note of other quality issues (like PCS failures).

 

[gaswalla]

I have 168k miles on my 2018 Model 3. If the ESA covered me for a 168k miles, I would have broken even. It would have been a bad purchase with the terms associated with the ESA, though.
When you say "hedging my bets," it sounds like a monetary issue. If you mean 'hedging your emotions,' then you should definitely buy it as noted above

 

[jjrandorin]

Thank you - these are helpful thoughts. The difference here stems from my lack of faith in Tesla quality vs. say my wife's Lexus with similar miles. I've driven Toyota's mostly in my life and never really was worried about a part breaking bc of their quality record, at least in my own mind. It is not a money issue so much as "hedging my bets" against Tesla's quality record. I know forums are littered with "everyone's problems and complaints" and may not reflect the actual reality of the population of Tesla's. However, my heat pump failing in line with all the other Tesla heat pump failures (many articles on this problem) has given me cause for pause and to take note of other quality issues (like PCS failures).

I mean, it could happen, sure. With that being said, every extended warranty purchase ever, is always betting against "the house" (manufacturer) that you would have spent more repairing the product than you did on the extended warranty.

The manufacturer, that is, the entity that has all of the actuary data to make a data based decision on how much they will charge for said warranty, to ensure its a money making product for them in its entirety. For every "Doug DeMuro's Carmax Land Rover Warranty win" there are a large number of people who spent the money and just got to feel good about being protected against a large cost but didnt recoup what they spent.

Dont get me wrong, there IS value in feeling protected. I dont want to discount that. That also cant be quantified easily ("feeling good about it").

I mean, people (more than a couple) post here asking questions about "I want to PPF this leased Tesla", and from a financial perspective they might as well be lighting money on fire since they cant even buy the car at the end of the lease. They are paying to protect someone elses property, but if you point all this out, in the end, they want to feel good about the car they are driving, and the PPF makes them feel good about it.

This isnt that (PPFing a leased car), but a 3k spend for a 12 month period would be $250 a month, or less than most peoples new car payment. The PCS is a couple grand, so $200 a month, vs buying a new car which would be more than that. There is inherent cost in owning a vehicle as it gets older, this one or any other.

There are fewer things to break on model 3s than a typical ICE, but I havent seen anything to say they break less often. Its better to me to put aside the money yourself, because you "get it back" if you dont spend it but that doesnt quantify the "feel good" aspect, which is a thing, and I am not putting that down or poo pooing it.

I generally dont like to get into these type of discussions because so much of it is personal. Just like advice on "never lease a car!" or "Only pay cash for a car, if you cant pay cash you cant afford it!!!" totally discounts the "feel good" aspect that someone might feel when they stretch a bit to get a car that makes them feel good every day, this isnt that much different.

Everyones needs / desires are different on this. Like I said, I dont normally get into this type of thing online, because people who really like extended warranties and those who dont tend to go back and forth, and there isnt anything particularly wrong with either position. Hard to quantify how good having an extended warranty might make someone feel, and as I said repeatedly, nothing wrong with that.

 

[Jeremy3292]

I mean, it could happen, sure. With that being said, every extended warranty purchase ever, is always betting against "the house" (manufacturer) that you would have spent more repairing the product than you did on the extended warranty.

The manufacturer, that is, the entity that has all of the actuary data to make a data based decision on how much they will charge for said warranty, to ensure its a money making product for them in its entirety. For every "Doug DeMuro's Carmax Land Rover Warranty win" there are a large number of people who spent the money and just got to feel good about being protected against a large cost but didnt recoup what they spent.

Dont get me wrong, there IS value in feeling protected. I dont want to discount that. That also cant be quantified easily ("feeling good about it").

I mean, people (more than a couple) post here asking questions about "I want to PPF this leased Tesla", and from a financial perspective they might as well be lighting money on fire since they cant even buy the car at the end of the lease. They are paying to protect someone elses property, but if you point all this out, in the end, they want to feel good about the car they are driving, and the PPF makes them feel good about it.

This isnt that (PPFing a leased car), but a 3k spend for a 12 month period would be $250 a month, or less than most peoples new car payment. The PCS is a couple grand, so $200 a month, vs buying a new car which would be more than that. There is inherent cost in owning a vehicle as it gets older, this one or any other.

There are fewer things to break on model 3s than a typical ICE, but I havent seen anything to say they break less often. Its better to me to put aside the money yourself, because you "get it back" if you dont spend it but that doesnt quantify the "feel good" aspect, which is a thing, and I am not putting that down or poo pooing it.

I generally dont like to get into these type of discussions because so much of it is personal. Just like advice on "never lease a car!" or "Only pay cash for a car, if you cant pay cash you cant afford it!!!" totally discounts the "feel good" aspect that someone might feel when they stretch a bit to get a car that makes them feel good every day, this isnt that much different.

Everyones needs / desires are different on this. Like I said, I dont normally get into this type of thing online, because people who really like extended warranties and those who dont tend to go back and forth, and there isnt anything particularly wrong with either position. Hard to quantify how good having an extended warranty might make someone feel, and as I said repeatedly, nothing wrong with that.

Thank you - your posts have always been very helpful and I appreciate that. Like I said I have always been a “self-insure anti-extended warranty type” person, but for some reason I have been heavily considering the Tesla ESA. Probably bc I just had my heat pump fail way earlier than I would have ever expected a major part to fail. So yeah probably more emotion at this point than hard numbers ironically for me.

 

[jjrandorin]

Thank you - your posts have always been very helpful and I appreciate that. Like I said I have always been a “self-insure anti-extended warranty type” person, but for some reason I have been heavily considering the Tesla ESA. Probably bc I just had my heat pump fail way earlier than I would have ever expected a major part to fail.

If it makes you feel any better for contemplating it, even though my own position on this is I think fairly clear (from my last two posts), when my model 3 warranty ended (Dec 2022), I spent like a week agonizing over whether I should buy the xcare extended warranty.

One of the things that had me going down that road was, if I remember correctly, the Tesla warranty was not even offered to me in the Tesla app for my 2018 Model 3P. That actually gave me some pause (that actuary data I was talking about). I remember wondering if there was some specific reason that tesla was not offering it for my car.

I didnt buy one, but I thought about it for a bit (the feel good thing, lol).

 

[SageBrush]

Warranties are buying good feelings, or hedging against not being able to afford a repair.

Well said.
Warranties are insurance by another name, and insurance spans a range from 'pay ahead' schemes/scams like whole life insurance and assisted living, to diffusion of risk. The former are exploitative, the latter a good idea unless the middle-man fees are high.

These threads are almost universally started by people looking for affirmation. In that vein, I say to OP: Absolutely! Do whatever it is you were going to do anyway. Everybody else should realize that high repair cost anecdotes are useless information because they have no incidence data outside of warranty.

 

[SageBrush]

I mean, it could happen, sure. With that being said, every extended warranty purchase ever, is always betting against "the house" (manufacturer) that you would have spent more repairing the product than you did on the extended warranty.

Yes, and it is easy money to bet that the house has rigged the game in its favor, even before accounting for marketing, profit, admin costs, and the increased likelihood of warranted customers abusing the warranty.

I take a simplistic stats approach to these questions because I have the money to pay out of pocket. If the warranty cost for 2 years of coverage is about 0.5x the average repair cost, and the opportunity cost of not investing the money spent on the warranty is 20%, it ~ follows that the breakeven point is 0.6 out of warranty repairs during the extended warranty period.

If the break-even repair frequency is the case, then of the 1M Teslas sold this year in the US, 0.6M will be in for repair between years 4 - 6. There are 168 Tesla service centers in the US, so on average (presuming no growth in service center number), they will repair 7 of these cars every work day. That work schedule does not include warranty repairs or out of extended warranty repairs. Now we can include labor per repair. I'll guess 3 hours per repair, so 21 labor hours a day. If a technician works 7 hours a day net, then we should expect to find 3 Tesla techs at each service center dedicated to repairs on 4 - 6 year old cars

Another data point is also available: A US based publication tracks the per car warranty claim rate of manufacturers. Here is Ford, GM and Tesla for the past 20 years:



This would suggest that the extended warranty has to be used ~ 15x more frequently than what Tesla experiences for its new car average warranty claim rate for it to be a value choice.

 

[sdbonez]

As someone mentioned, Tesla has the data, has run the numbers, and is making a profit. If you can weather the financial side, likely better to stay clear of an extended warranty. That said, there are a couple of things to also consider:

1. Do you have any data that Tesla doesn't? Maybe you drive the vehicle especially hard or on especially terrible roads. How well have you cared for your vehicle? Kept in a garage? Taken off-roading?
2. Quality of your vehicle should also be considered. Has your car felt great, typical, or more lemon-like when it comes to overall quality?

 

[ucmndd]

You just got a brand new heat pump on the house. This greatly diminishes the odds of you needing another one in the period the ESA would cover.

IF your PCS fails you’d basically break even, so you’re essentially pre-paying for that service.

I just don’t see the upside. Doesn’t appear to be a lot of other super problematic areas that lead to expensive repairs.

 

[ODWms]

I haven't been a big proponent or user of after market warranties of any kind. I've found that, over years, the likelihood of me spending more than the warranty would have cost has been pretty low. I would save my money. Are there anecdotes that have proven otherwise? Absolutely. But my luck just hasn't been that bad. I suspect neither has that of most people.

 

[S&B's M3]

You might want to look into Xcare...

 

[terranx]

On some cars they can be very well worth it, but on a model 3, I think it’s tough to make a strong case for it. The biggest concerns, which would be the battery and drive units are already covered by larger warranties. Big ticket repairs outside of that area are less likely, and likely wouldn’t cost much more than the warranty anyway. So I would personally risk going without it

 

[SageBrush]

On some cars they can be very well worth it, it on a model 3, I think it’s tough to make a strong case for it. The biggest concerns, which would be the battery and drive units are already covered by larger warranties. Big ticket repairs outside of that area are less likely, and likely wouldn’t cost much more than the warranty anyway. So I would personally risk going without it

I agree with this. Moreover, PTC heaters and heat pumps just might become items that can be sourced from a market that sells parts from totaled cars. Now that Tesla is a high volume manufacturer for the Model Y and Model 3, I'm optimistic that the Tesla premium will go away

 

[Technokrat]

IMO, it depends on how long you plan to keep the car and what's your expectation on maintaining it.