Tesla Extends Drive Unit Warranty To Infinity And Beyond

3 years ago by Jay Cole 54

More Than A Few Tesla Model S Owners Will Sleep Better Tonight!

More Than A Few Tesla Model S Owners Will Sleep Better Tonight!

In the wake of more than a few drivetrain exchanges being done on existing Tesla Model S sedans – most notably the 4th such warranty action that was needed on Edmunds’ long-term car, Tesla has made the extraordinary step of expanding the warranty on the drive unit from 4 years/50,000 miles to 8 years or infinitely miles on the 85 kWh versions of the Model S.

Info Update: The 60 kWh Model S versions now have a 8 year/125,000 mile warranty. (thanks to Omar for passing along the 60 kWh data)

For Those Interest In The Upcoming Tesla Model X With AWD, This Is Likely Also Good News

For Those Interest In The Upcoming Tesla Model X With AWD, This Is Likely Also Good News

Which basically makes Edmunds suggestion to future/current Model S owners of “…if you’re set on buying one, or already have one and plan on keeping it for a while, (we) would HIGHLY recommend that  you buy the extended service plan for $4,000,” fairly moot.

In fact, this drivetrain guarantee now matches the formidable battery warranty already in place; meaning that if you did shell out for the extended service plan…today’s announcement might not make you feel quite as good about your purchase.

Tesla CEO Elon Musk made this statement today announcing the expanding coverage.

Infinite Mile Warranty
By Elon Musk, CEO

The Tesla Model S drive unit warranty has been increased to match that of the battery pack. That means the 85 kWh Model S, our most popular model by far, now has an 8 year, infinite mile warranty on both the battery pack and drive unit. There is also no limit on the number of owners during the warranty period.

Moreover, the warranty extension will apply retroactively to all Model S vehicles ever produced. In hindsight, this should have been our policy from the beginning of the Model S program. If we truly believe that electric motors are fundamentally more reliable than gasoline engines, with far fewer moving parts and no oily residue or combustion byproducts to gum up the works, then our warranty policy should reflect that.

To investors in Tesla, I must acknowledge that this will have a moderately negative effect on Tesla earnings in the short term, as our warranty reserves will necessarily have to increase above current levels. This is amplified by the fact that we are doing so retroactively, not just for new customers. However, by doing the right thing for Tesla vehicle owners at this early stage of our company, I am confident that it will work out well in the long term.

– Elon

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54 responses to "Tesla Extends Drive Unit Warranty To Infinity And Beyond"

  1. Omar Sultan says:

    To clarify a bit, the drive unit warranty now matches the battery warranty – for S/P85 owners that is 8 years/unlimited miles and for S60 owners is is 8 years/125K miles.

    O

    1. staff says:

      Thanks Omar for the note on the 60 kWh warranty details – that should really be in the story too! Added now!

  2. DaveMart says:

    If I were a shareholder I would not be feeling great about Musk effectively betting the company against a drive train which at the least can be said to have had its problems.

    That may be a sign of confidence, or desperation.

    Does this indicate confidence, or that somehow the loss of confidence in the product has to be stemmed?

    I lean towards the former, but don’t rule out the latter.

    1. Joshua Burstyn says:

      As usual, DaveMart is here to give us the straight goods on all things Tesla. Not.

      1. DaveMart says:

        Its a viewpoint.

        I am happy for others to disagree and think that this undertaking will not have any possible monetary consequences.

        You seem to have difficulty with anyone diverging in any way from the authorised version.

        1. Big Solar says:

          DaveMart, all I can say is they hired the right man for the job.

          1. DaveMart says:

            If you are falsely and utterly without evidence attributing improper and undeclared financial interest on my part at least have the guts to come out and say so, however asinine it is to make accusations without a shred of evidence.

            What I have offered is an observation based on my knowledge of accounting, and the bankers if not immature fans will certainly be interested on the possible costs of such an undertaking, which would not have been needed if the car had not had enough troubles to cast doubt on its reliability.

            Presumably Musk is off-setting the possible costs of such an undertaking against the hit Tesla would take on trade in values if people get worried that the car may be unreliable.

            Since they have also guaranteed the trade in value that is a serious concern.

            So now both the trade in value and the drive train etc have been assumed as a liability by Tesla.

            That is fine as long as they can achieve good reliability, but a huge and uncertain cost if they don’t.

            I suggest that if you have neither the intelligence and impartiality to make a proper assessment nor the manners to refrain from impertinent and groundless slurs you stick to communications with fellow fans who want to worship, not engage their brains.

            1. Nate says:

              >>”I suggest that if you have neither the intelligence and impartiality to make a proper assessment nor the manners to refrain from impertinent and groundless slurs you stick to communications with fellow fans who want to worship, not engage their brains.”

              Dave, most of the time I don’t agree with you. That would be OK, until you start contradicting yourself like this in a single sentence like this. Stay classy, my friend, even if others do not.

        2. krona2k says:

          “Its a viewpoint.”

          Yeah, an incorrect one. “betting the company”? Seriously?

          I *AM* a shareholder and I’m very happy with this.

          1. DaveMart says:

            You are perfectly entitled to your assessment, nor am I offering any evaluation on the share price as I have not done due diligence and, since as I have said, have no financial interest do not intend to.

            What is clear though is that this is an undefined liability, together with the guarantee of resale price and the supercharger system, which is however much more clearly defined but is just the same a long term cost.

            This is not the first time the car industry has offered this sort of guarantee, here in the UK Kia offers a 7 year guarantee.

            That is however for products which have a long history in production, and I believe that the guarantee does not apply in all markets and so may represent a relatively limited proportion of their output although I have not checked that.

            My remarks are intended to indicate that this is a relatively risky move, not to give a verdict on whether it will come off.
            That is fine as long as it does work, and your decision that it is an acceptable risk is your judgement call.

            That does not alter the fact that there are risks entailed, and that the financial industry will most certainly adjust their view of Tesla’s accounts because of this, which can to one degree or another impact their credit rating.

            1. AddLightness says:

              “this is an undefined liability”

              So it makes more sense for this undefined liability to be pushed onto Tesla’s customers? To me that sounds like bad business especially for a company like Tesla. Elon Musk understands this and so will shareholders that have any sort of common sense. Tesla is in the spotlight, and therefore has to practice what they preach and this is another great step in doing that.

              1. DaveMart says:

                Beyond a reasonable period of guarantee just about every other consumer product is at the consumer’s risk.

                I am not concerned with moral issues as to who ‘should’ bear that risk, but obviously the accounts of a company which do not have that sort of potential liability are far stronger.

                It is a high risk strategy and upping the stakes.
                Whether it was wise or not we can’t know until later when we find out how reliable the cars are over the long term.

                Its all fine but if in 5 years time or so there is a major unforeseen problem things could unravel very fast indeed.

                1. Chris O says:

                  Hmmm, you sound like a frustrated hydrogen hoaxer grasping at straws. After all hydrogen really doesn’t stand a chance if Tesla is not stopped. These 2 agenda’s really can’t coexist.

                  Musk is right though: EV drivetrains are simple and once some initial issues have been worked out the warranty liability should be well under control.

                2. See Through says:

                  Dave,
                  The Tesla fanbois are here to insult, not argue.
                  Tesla has already warned that the earnings will be moderately impacted by this. So, clearly, there is substantial financial impact.

                3. Phr3d says:

                  +1 from admitted Musk fanboi, heheh.

    2. Mike says:

      Musk has the best data on the count and quality of the driveline “problems”, indicating to me that they are not numerous or the severity is not great.

      And this is a clear indicator of that.

      1. CherylG says:

        They are not numerous? If that was true, then why did Tesla have to announce negative guidance on earnings?

        We were led to believe earlier that this was a non issue, yet today Tesla had to announce a material change to guidance. That would not have been required had these failures been rare occurrences.

        1. Nicklas says:

          On the contrary; since it is rare they can with confidence offer this extended warranty.

          This is a statement in that they truly believe their machines will hold up…

        2. See Through says:

          There could also be negative impact, if those who bought extended warranty earlier now ask for a refund, since it is not so valuable anymore.
          At the very least, the new extended warranty will need to cost 75% cheaper than previous $4000 price.

        3. Fool Cells says:

          Because if even one car has a problem, it will negatively impact their finances. You have to say that.

          1. sven says:

            If one car has a problem, it would not have a material impact on Tesla’s earnings. Tesla does not have to provide negative financial guidance for something that will have an immaterial effect on earnings.

        4. Mint says:

          Any auto manufacturer that chose to extend warranty by 4 years retroactively would have to give negative guidance, you dimwit.

          Ford recently had to do the same even without extending warranty:
          http://uk.reuters.com/article/2014/04/25/ford-motor-results-idUKL2N0NH0CA20140425

    3. Mint says:

      Good point, but I think Tesla investors are used to this sort of thing. Lifetime free supercharging and the residual value guarantee are more potential long term liabilities.

      I don’t think your two possibilities are mutually exclusive. Much like the fire issue, you can be confident in your product while also feeling you need to be proactive in fending off negative image.

    4. Mikael says:

      Definitely confidence. Confidence that the drivetrain is good today and that with the kinks ironed out and future improvements it will basically last forever.

      Confidence that any and every problem current or future will be moved along to the engineering department and be their headache and not the customers or in the long run share holders.

    5. Weapon says:

      This is actually a good move for shareholders. The cost of this is minor, looking at Tesla’s expenses on warranty work, it is in line with other manufacturers. And this is considering that Tesla is going up and beyond for customers.

      The cost of the move in almost nothing, it will have a hit on Q3 as they need to fund the warranty reserve to account for 40k+ cars in 1 quarter. Otherwise in the long term, this will improve their financial standing actually.

  3. jmac says:

    The Instant Torque thing in EVs.

    It’s like somebody taking a sledgehammer to your gear train. (usually a single reduction gear in most EVs)

    I hear Tesla Model S has developed milling noises as bits of steel grind themselves into oblivion under awesome battery energy that’s suddenly dumped into the drive-train through an electric motor with instant torque.

    To get a 4,000 lb vehicle from zero to 60 mph in 4.5 seconds or less is amazing and very admirable, but why not let the transmission spool up a bit before hammering the rear end with electrons ?

    A few milliseconds of delay might save a lot of recalls and expense to Tesla.

    1. CherylG's_DirtyLittleSecret says:

      Or a not so heavy foot all the time…..lol

      I know, it’s ALWAYS tempting.

  4. Rob Stark says:

    This move protects the brand at minimal cost according to Musk.

    That is good thing for TSLA investors.

    I know the know-nothings will say yet again Musk is just lying but only time will tell.

  5. Benz says:

    Confidence:

    “Moreover, the warranty extension will apply retroactively to all Model S vehicles ever produced. In hindsight, this should have been our policy from the beginning of the Model S program. If we truly believe that electric motors are fundamentally more reliable than gasoline engines, with far fewer moving parts and no oily residue or combustion byproducts to gum up the works, then our warranty policy should reflect that.”

    1. See Through says:

      Musk is admitting his mistake in not offering this from the beginning? Come one now!

      He was grilled in the earnings call about the driveunit issues. Now, they are only reluctantly extending the warranty.

      1. Mint says:

        If it was reluctant then why would it be retroactive?

        Past sales are just that, bought from people that knew they’re buying a car from an unproven manufacturer, and were given an extended warranty option.

        You just get more pathetic by the minute.

  6. MDEV says:

    And that is why Tesla is the best automaker ever.

    1. kdawg says:

      I dunno. The Volt has a 150,000 mile 10 year warranty in almost all the CARB states. Tesla’s 8-year warranty is more like the industry standard.

      1. sven says:

        I think you are mistaken. In CARB states the 10-year/150,000 mile warranty is for the Volt’s battery, while the 8-year/100,000 mile warranty is for the Volt’s electric drive unit.

        Battery warranty: page 26
        “* PZEV Hybrid Batteries and Hybrid
        A/C compressor are covered for
        10 years or 150,000 miles,
        whichever comes first.”

        Electric drive unit warranty: page 14 to 16
        “[page 14] Volt-Specific Warranty [page 15] What Is Covered This Voltec warranty covers . . . during the 8 year or 100,000 miles (160 000 kilometers) term for the following: . . . [page 16] Electric Drive Unit Electric drive unit assembly and
        internal components. . .”

        http://www.chevrolet.com/content/dam/Chevrolet/northamerica/usa/nscwebsite/en/Home/Ownership/Warranty/02-pdfs/2k14chev_lim_wm2ndprint.pdf

        1. kdawg says:

          http://en.wikipedia.org/wiki/Partial_zero-emissions_vehicle

          “All emissions-related components must be warrantied for 15-years or 150,000-miles. This includes the electric propulsion components of a hybrid electric vehicle.”

          1. sven says:

            You are correct! The drive motors on a PZEV Volt are warrantied for 15-years/150,000 miles in most CARB states (CA, CT,
            DE, ME, MD, MA, NJ, NY, RI, & VT). Thanks for enlightening me about my NY Volt’s warranty. 😀

            Per the 2014 Chevrolet Warranty booklet:
            “[page 28] Emission Warranty Parts List . . . All listed parts 15 years/
            150,000 miles, whichever comes
            first, on California PZEV (NU6)
            vehicles registered in a PZEV state
            except Hybrid batteries and Hybrid
            A/C compressors, which are
            covered for 10 years/150,000 miles,
            whichever comes first. . . . [page 30] Hybrid . . . Drive Motors and Resolvers *”

            http://www.chevrolet.com/content/dam/Chevrolet/northamerica/usa/nscwebsite/en/Home/Ownership/Warranty/02-pdfs/2k14chev_lim_wm2ndprint.pdf

  7. Mark says:

    Totally just put me over the top on the 85 over the 60.

  8. CherylG's_DirtyLittleSecret says:

    Young company on a new product.

    Typically things get better/stronger and more reliable in time.

    1. Anon says:

      Generally true.

      It will be interesting if Model X mitigates motor milling via two AWD motors each sharing partial load + lessons learned from S.

  9. Taser54 says:

    It was the appropriate thing to do given the questions about the reliability of the drive unit. Nice job Tesla.

  10. Tesla understands that reputation is more important than paying for the cost of some early product quality lessons. Bravo!

    The extra sales will more than make up for any losses, I’m sure.

    1. See Through says:

      But now, Tesla is no longer the 5+ rated car! All those chest beating by Msuk, that its ratings went higher than the scale have vaniched!

      Time for Tesla to go to the QA room and test the wheel alignments.

      1. Anon says:

        I think you’re confusing NHTSA safety numbers with Consumer Reports review system…

        1. Phr3d says:

          That would imply that See Through CherylG has sufficient knowledge of either to allow that confusion. I believe that Any data that conflicts with their widely dispersed and humbly offered advice regarding all things Tesla has value Only to those (Tesla fanbois) that can not agree with their thoughtfully documented conclusions.

      2. > Time for Tesla to go to the QA room and test the wheel alignments.

        Yes, that’s true. That is another issue that needs to be addressed, and I believe it will be.

        My Fiat 500e and Ford Focus Electric also had issues that were addressed by the manufacturer. As long as they do the right thing and take car of the issues, I’ll stay a happy, loyal customer.

        Hard to see taking care of the custome in a negative light, but you and DaveMart manage it somehow.

  11. GeorgeS says:

    What side should I take.???

    OK:

    Tesla f*cked up the 2 speed on the first Roadster. (Yes I know they sub’d it to BW)

    Looks like they screwed up on the S too.

    Perhaps they are short on good “Mechanical Component Design” engineers.

    I don’t want to be on that dragon capsule….and who could trust them to design a liquid fueled rocket engine??

  12. Spec9 says:

    Tesla is playing the long game. At this point both the Roadster and the Model S are loss-leaders for what will come.

    1. Anon says:

      Basically. Each generation pays for the next. Once multiple market segments are supplied, then comes the mega-investor profit.

  13. ffbj says:

    Another in a series of interesting and somewhat unusual moves by Tesla, somewhat dictated by circumstance. Responding to complaints and fixing problems to actualize what they claim to be. Another example of how Tesla is not your normal automobile maker.

  14. Josh says:

    This is a brilliant move by Musk to reassure his current owners and future owners. This will be really critical once the X and possible S revisions come out next year and their is a meaningful supply of used Model S.

    Tesla is on the hook for the 3 year resale value of about half their US sales the last year. They have a strong interest in keeping a high value for Model as in the secondary markets.

    1. Model S resale values are way over the guarantee. There’s not a lot of risk there.

  15. Foo says:

    “8 years or infinitely miles”? I can’t parse this.

    1. Joshua Burstyn says:

      I understand Tesla’s new warranty to mean “within eight years, any number of kilometers/miles”.

  16. Curtis Ling says:

    now if they get a SUV like the outlander or forester (good offroad and good visibliity ) on the cheap i am sold