Warranty/Servicing - official Tesla responses (incl GeorgeB)

[pilotSteve]

Reading the Goldman Sacks secondary stock offering prospectus (yesterday) made me realize there could be a "darker" side to the service costs not included in the base vehicle price. Namely: should Tesla suffer a bankruptcy and restructure (unlikely IMO but they are dangerously close to running out of cash), any warranty expenses could be shed. And by defining service as a "post sale" purchase, that revenue (estimated to be $6-10 million per year) would be cashflow for the "new" Tesla company.

I remain firm that charging for this service is and will be a bad PR move that Tesla should reverse early next year once their cash crunch has eased and they see the drag this policy has on the EV sales pitch. Free Supercharging is great by only benefits some owners some time; included no-charge service benefits all owners!

 

[Rifleman]

Reading the Goldman Sacks secondary stock offering prospectus (yesterday) made me realize there could be a "darker" side to the service costs not included in the base vehicle price. Namely: should Tesla suffer a bankruptcy and restructure (unlikely IMO but they are dangerously close to running out of cash), any warranty expenses could be shed. And by defining service as a "post sale" purchase, that revenue (estimated to be $6-10 million per year) would be cashflow for the "new" Tesla company.

I remain firm that charging for this service is and will be a bad PR move that Tesla should reverse early next year once their cash crunch has eased and they see the drag this policy has on the EV sales pitch. Free Supercharging is great by only benefits some owners some time; included no-charge service benefits all owners!

I agree that the service fee is bad for Tesla. Just an anecdotal example, but it cost them my reservation (I canceled P8661 after George confirmed that not paying for the service wold void your warranty, as the extra fee was the final expense that pushed the Model S out of my price range)

 

[dave]

I won't be buying a service plan for my car. I haven't cancelled my reservation yet because I still find it hard to believe or even that it is legal to force paid dealer inspections in order to keep a warranty valid. I'm hoping it will end up being clarified by next year when my turn comes around (P9397). However, if it is not changed by then, I will be cancelling my reservation as well.

The cost of the car is already a stretch, but I was able to make the argument to myself and my wife that we are paying for a nice family car, and just "prepaying" for fuel and maintenance costs (as part of the base car price) that we would have had to pay if we had an ICE car. (Ala the http://www.teslarumors.com/Teslanomics.html website)

However, this mandatory service plan, plus delivery fees, prep fees, electrical wiring and adapter fees, etc, are all adding to the price "creep" that starts to invalidate my "value" based argument to buy the car. It is pushing it back into the realm of a cool luxury car, but impractical for a middle class family like us.

People are comparing the car's service plans to Audi's, BMW M5's, Porsche Panamera, etc. I don't care what their service plans are because I was never in the market for an $80K ICE vehicle to begin with. I was sold on the technology, company vision, and green benefits of this car. I am comparing this to my current Infiniti G37 ($35K new) that I drive. I do ALL of my own maintenance (so far), and have a perfectly valid warranty. I was willing to pay another $25K for a similar level of luxury, but get the EV benefits. This mandatory service fee though is pushing it past that price point, and just makes it too impractical.

I'm still holding out for a change in policy, but another $2400 just pushes the price of this car too high for very little in return.

 

[sp4rk]

There are at least 3 Model Ss arriving in Indiana soon and **** that's not far from Wisconsin ****. We basically have no idea what the long term maintenance costs of the Model S will be. We know about the $475/year for first 4 years. It's entirely possible that Tesla is right and that over time, it ends up being cheaper than something like a 5 series in years 5-10.

S'pose everything is relative.
There's this state, it's called Illinois ... where I currently reside (although I'd give a lot to get OUT!) ... which is between Indiana and Wisconsin.
Quite an unpleasant drive too!
Not far?
I'd say IL is not far ...

 

[dsm363]

It's only $2,400 for unlimited Ranger visits or if you don't prepay. Otherwise $1,900 for 4 years prepaid. Hopefully they can come up with something where you bring your car in for a battery system check and pay maybe $200 and you can do the rest of the service yourself.

 

[stopcrazypp]

Hopefully they can come up with something where you bring your car in for a battery system check and pay maybe $200 and you can do the rest of the service yourself.

A lower service fee along those lines would alleviate the concerns of most people (a mandatory $600 really is a bit ridiculous). The EV components are pretty much the only parts where a third party inspection isn't a viable option.

 

[swegman]

Tesla reported that approximately 1200 reservations were canceled. They did not indicate the reason(s) for the cancellations, but I'm certain that some of them were due to maintennance plan.

 

[jerry33]

If you look at the maintenance plan has helping to pay for the free charging, it's not that bad. Sure I'd like it to be less, but free supercharging goes a long way to ease the pain. (about 25% of the miles I drive are "over 300 mile trip"[SUP]*[/SUP] miles).

[SUP]*[/SUP] There is probably a better way to say that.

 

[sp4rk]

Tesla reported that approximately 1200 reservations were canceled. They did not indicate the reason(s) for the cancellations, but I'm certain that some of them were due to maintennance plan.

Sadly, that's a huge number.
You have to wonder how many were Sigs at $40,000 and how many were production $5k.
Even so, at $75,000 (avg.) a car?, that's $90M.
Probably the cost for 2 years build out of the Supercharger network.

 

[jerry33]

But isn't that 1,200 since reservations began in 2009? Over three years that's not really surprising. Also they didn't say how many got back in line (at least one forum member has done so) and how many went to Model X (we know a few have done that). Also some people hedged their bets with both a Sig and a Production reservation.

 

[donauker]

If you look at the maintenance plan has helping to pay for the free charging, it's not that bad. Sure I'd like it to be less, but free supercharging goes a long way to ease the pain.

Yes, ever since the supercharger announcement I have been feeling much better about the whole maintenance plan thing. Now when you break it all down as follows, it feels like a very good value.

120.00 - Basic data plan with Tesla diagnostic monitoring and phone app access. ($10 a month)
75.00 - Software Update Package
50.00 - Roadside Assistance and towing
120.00 - Unlimited Supercharger access
110.00 - Annual inspection with alignment, tire rotation, and wipers!
475.00


Sounds like an amazing deal to me!

 

[dsm363]

Yes, ever since the supercharger announcement I have been feeling much better about the whole maintenance plan thing. Now when you break it all down as follows, it feels like a very good value.

120.00 - Basic data plan with Tesla diagnostic monitoring and phone app access. ($10 a month)
75.00 - Software Update Package
50.00 - Roadside Assistance and towing
120.00 - Unlimited Supercharger access
110.00 - Annual inspection with alignment, tire rotation, and wipers!
475.00


Sounds like an amazing deal to me!

I agree. I realize it's still a lot of money but we're not buying a tried and true Ford Taurus here. Early adopters will always pay a penalty and we can hope it will lessen by Gen III time.

 

[ModelS1079]

Just finished speaking in person with George 30 minutes ago. We spoke for quite some time. He defended the service plan and showed it to be an asset for us all. And he was amazingly kind with his time. Class act. $1900. Four years. No worries. I'm in. And I am betting dsm363 is in heaven behind the wheel.

 

[bonnie]

Just finished speaking in person with George 30 minutes ago. We spoke for quite some time. He defended the service plan and showed it to be an asset for us all. And he was amazingly kind with his time. Class act. $1900. Four years. No worries. I'm in. And I am betting dsm363 is in heaven behind the wheel.

George IS a class act and cares about Tesla customers.

 

[dsm363]

Just finished speaking in person with George 30 minutes ago. We spoke for quite some time. He defended the service plan and showed it to be an asset for us all. And he was amazingly kind with his time. Class act. $1900. Four years. No worries. I'm in. And I am betting dsm363 is in heaven behind the wheel.

Yep! I agree, George is awesome and am glad he's at Tesla.

 

[swegman]

Jerry33, I had reservations for two cars, a signature and a production. I was going to get both cars. I canceled the signature for a number of reasons, mostly because features they told me would be included in the car are not currently available. I deferred the production for the same reason, and am leaning towards canceling that car if things don't change. I ordered the cars basically for 1 reason; I liked the 17 inch touchscreen which I was told 3 years ago would be able to access any website and play any video/audio file, just as a laptop can do. Sadly, that is not currently the case, and I don't know if it ever will be. The premium cost for the model S over an ICE car (with and without the extra cost for naintennance) pays for a lot of gas, which I would never make up based on the amount of driving I do and the cost for maintennance I am currently paying for my 3 cars.

 

[RDoc]

Just finished speaking in person with George 30 minutes ago. We spoke for quite some time. He defended the service plan and showed it to be an asset for us all. And he was amazingly kind with his time. Class act. $1900. Four years. No worries. I'm in. And I am betting dsm363 is in heaven behind the wheel.

Could you share some of what was said?
Specifically is the service plan a requirement for keeping the warranty in effect?
Also, did he say anything about what happens after 4 years/50 K miles, e.g. what's needed to keep the battery warranty in force?

 

[jerry33]

Jerry33, I had reservations for two cars, a signature and a production. I was going to get both cars. I canceled the signature for a number of reasons, mostly because features they told me would be included in the car are not currently available. I deferred the production for the same reason, and am leaning towards canceling that car if things don't change. I ordered the cars basically for 1 reason; I liked the 17 inch touchscreen which I was told 3 years ago would be able to access any website and play any video/audio file, just as a laptop can do. Sadly, that is not currently the case, and I don't know if it ever will be. The premium cost for the model S over an ICE car (with and without the extra cost for naintennance) pays for a lot of gas, which I would never make up based on the amount of driving I do and the cost for maintennance I am currently paying for my 3 cars.

Three years is a long time to wait for a car, and there's no shame in canceling/deferring if the car isn't what you thought it would be. My wait will be about one year, which is only a bit longer than the wait for my last two cars, plus because I got in not all that long ago my expectations are closer to what the actual car is. If I defer it will be because production is going faster than I originally estimated.

 

[digitaltim]

I think I have said some of this before, but I think the $600/12.5k miles is a deal - especially if they hold the rate for years four and beyond. I averaged $1k/year in maintenance (not incuding tires) for my BMW and ~$2k/year for my Volvo over the respective 11 and 9 years we owned them. The Volvo was a lemon, so Ignoring that I still see savings over the life of the car (200k miles over years) on maintenance alone. Once you factor in fuel/energy, there is no comparison from my perspective...an ICE-based vehicle would have to get 138+ mpg to best the Model S in my model.

 

[neroden]

I won't be buying a service plan for my car. I haven't cancelled my reservation yet because I still find it hard to believe or even that it is legal to force paid dealer inspections in order to keep a warranty valid.

It is illegal if Tesla doesn't get an FTC waiver -- Magnusson-Moss Warranty Act (US Code 15 section 2302 clause c).

George B has now explicitly said that they will "forfeit" your warranty if you don't get service from a "Tesla Certified" technician, which is in direct conflict with the legal requirements of the Warranty Act (read it at
15 USC § 2302 - Rules governing contents of warranties | LII / Legal Information Institute ).

I'm hoping it will end up being clarified by next year when my turn comes around (P9397). However, if it is not changed by then, I will be cancelling my reservation as well.

You might want to remind them that they're violating federal law. It might help clarify their minds. Tesla's legal team are clearly gross incompetents.

The cost of the car is already a stretch, but I was able to make the argument to myself and my wife that we are paying for a nice family car, and just "prepaying" for fuel and maintenance costs (as part of the base car price) that we would have had to pay if we had an ICE car. (Ala the http://www.teslarumors.com/Teslanomics.html website)

However, this mandatory service plan, plus delivery fees, prep fees, electrical wiring and adapter fees, etc, are all adding to the price "creep" that starts to invalidate my "value" based argument to buy the car. It is pushing it back into the realm of a cool luxury car, but impractical for a middle class family like us.

I'm still planning to get the car, but here's the actual base price:

Advertised base price: $49,900
Tax credit you might not get: $7500
Mandatory "delivery fee": $990
Mandatory "prep fee": $180
Mandatory-for-warranty, illegal service fee: $1900
True base price of car: $60470

So I was comparing to cars which have base prices of $60K, so it still seems worth getting.

However, the advertised pricing is dishonest, and is also illegal. It would be perfectly legal to require dealer service if the price of service was included with the price of the car, which goes to show that Tesla really, really, REALLY should have just included it with the price of the car. Sure, a car with a base price of $60970 ($80970 for the 85 kWh model) might have deterred people, but I don't think it would have deterred as many people as this behavior is deterring. It's making me consider selling the stock if they don't hire a competent legal team soon.

- - - Updated - - -

Mostly. One fellow cancelled on the principle of being required to go to Telsa as he said "money wasn't the issue", which was unfortunate since it wasn't really the case he had to go to Tesla legally.

I think the outright statements from high-up Tesla executives contradicting this are really the problem.

Tesla is not acting cool. If Tesla said "Yes, of course we'll offer training courses for third parties to perform routine maintenance on our cars! And of course we won't require you to buy routine maintenance and inspection from us!" I think a lot of us would sit back and go "OK, cool."