Tesla Model S Service Contract: $600/Year, Or Warranty Voided

http://www.greencarreports.com/news/1079637_tesla-model-s-service-contract-600-year-or-warranty-voided

by tocomment • 14 years ago

66 85 14 years ago

mvkel• 14 years ago

Not terrible considering the infancy of the technology and the value these services will provide Tesla. If you can afford a $60K+ car meant for early adopters, you can afford an extra $600/year.

stcredzero• 14 years ago

"Emulating BMW instead of Benz" is good advice, however. If they want to make a product that's more awesome than a comparable ICE, then they need to include the service program in the price of the car.

jws• 14 years ago

It doesn't seem far out of line at all.

I just checked, I'm paying just over $300/year for dealer service and inspections on my Ford Transit Connect which sells for about 1/3 of a Tesla S.

I'm not getting roadside assistance (of a revision 1 vehicle), monitoring, or wiper blades. Heck, they usually neglect to reprogram the tire pressure monitor when they rotate the tires.

dur0nat0r• 14 years ago

Rich people problems (sigh)

allsystemsgo• 14 years ago

I would hardly call this "rich people problems". I know many who make roughly 60-80K a year, and I would certainly not call them rich, and they still purchase cars with a sticker price of 50K.

Is it a wise decision to make such a purchase? No. Is it commonplace? Yes.

Also, it's an early adopter price. It'll decrease a bit with time. This is a luxury car.

Also, this isn't Reddit. Contribute something of value to the conversation.

TylerE• 14 years ago

There is a word for those people: Foolish.

Anyone who ties up 20%+ of their annual income in car payments is, frankly, doomed.

AJ0072• 14 years ago

You are describing the type of consumer who has a problem with a $600 a year fee -- the ones who can't really afford the product or service in the first place.

This is a wide spread business marketing issue. You have different classes of consumers, and often the loudest complainers are the one who are on low level or free versions. Do they complain loudly because they are the only ones who have time to? May be its just their personality and why they don't have any money? I don't know.

From a business owner standpoint it is pretty easy to see how irrational the original article author's position is. However, it presents a dilemma between choosing to pacify this type of customer vs just ignoring them. Each has its share of downsides.

njharman• 14 years ago

> 60-80K

Selection bias. Vast majority of the world and significant % of USA that is rich (enough to have rich people problems). ~15% are below poverty line. Not rich people worry if they'll have enough money to buy food. Not rich people can't afford any car, let alone a luxury one.

namdnay2• 14 years ago

I agree, but I'm not sure why you singled this particular article out. HN is filled with articles discussing issues with iPhones, MacBooks and similar. They're all "rich people problems". In fact, I would consider that a car costing 60k is less of an outlier than a telephone that costs more than 600...

dionidium• 14 years ago

You could suggest that, but I think it's pretty obviously wrong. Waitresses and bartenders and community-college students have smart phones. They don't usually own luxury cars.

protomyth4• 14 years ago

"Moreover, any visit to a non-Tesla shop--even for something as simple as tire rotation--will also void the warranty. Period."

That might get them into trouble, there are laws protecting independent service shops. This is a fought battle and the manufacture lost.

ChuckMcM• 14 years ago

This is required if Tesla wants to survive as a car company. It reads like a way to distribute the impact of the large problems that are going to crop up early on (battery failure, recall for some part going wonky, Etc)

protomyth4• 14 years ago

Well, if it is required for them to survive, they are going to have issues. Magnuson-Moss Warranty Act and some state laws keep auto dealers and manufactures from pulling the "service with us or lose warranty". There are generally exceptions for freely provided services, but this isn't it.

Car modders and local services shops have been down this road before. Honestly expecting every service to occur at the dealers is foolish.

SoftwareMaven2• 14 years ago

Whil ou are completely correct, it will be many years before I would trust having my Tesla (if I was getting one...) serviced[1] anywhere that doesn't have Elon's personal seal of approval. While the warrantee can't be voided for taking the car somewhere else, it can be voided if Tesla can show damage is a direct result if work done.

If I blow my engine after I put a NOS kit on it, I will likely have voided my warrantee. If I do it after putting a cold-air intake on it, I probably haven't voided it.

1. The tire-rotation thing seems silly, but perhaps doing it incorrectly will damage the regenerative baking system. If that's the case, don't ever get a flat tire in the middle of southern Utah.

Peroni6• 14 years ago

Parsing Tesla's $600 fee, let's allocate $100 for the wiper blades, roadside assistance, monitoring, and software update features.

What about the brake pads mentioned in the previous paragraph? Replacement pads plus labour for fitting would run to $200 easily. I'll take most opportunities to bash Tesla but $600 a year is relatively cheap in my opinion.

mikestew5• 14 years ago

What about the brake pads? With regenerative braking, I expect the pads on my Nissan Leaf to last almost as long as the car.

Whether the $600/year is a good price is irrelevant. The matter at hand is "pay us $600/year or we void your warranty". It's shady, for one, and of questionable legality given Magnuson-Moss.

tehwebguy• 14 years ago

Was going to say what your parent said, but now I realize I might be missing key info about regenerative braking.

Do these types of cars use the engine for most braking, even when the pedal is pressed?

Peroni6• 14 years ago

I don't see how regenerative braking makes a difference? Correct me if I'm wrong but if the pad comes in contact with the brake disc every time you press the brakes, regardless of whether it generates energy or not, I don't see why the compound of the brake pad would wear down any differently to standard brakes.

bengl3rt2• 14 years ago

In my opinion, the whole thing can be explained in three words from Musk's reply: "concierge level service".

I have always been amazed (in a bad way) at the quality of the work done by service departments at luxury and high-end car dealerships. I'm not sure what kind of agreement these independently-owned dealerships have that they're allowed to use the manufacturer's corporate identity to promote their business, but it should be a whole lot stricter.

Conversely, I've never had my laptop receive a shoddy repair at an Apple store - after all, the repair facility is owned and being operated by the same company who built the machine in the first place, so they share common goals and incentives. If Tesla is trying to do for car dealerships and service centers what Apple did for high-tech retail, the privilege of participating would definitely be worth $600/yr to me.

Now, Apple does have a licensing program in place to certify independent repair facilities as "Apple Authorized Service Centers" where warranty work can be performed. I think Tesla would do well to create a similar program, and maybe they plan to! Who knows, it's early days yet.

AJ0072• 14 years ago

There is a reason why you can take a car to a mechanic and end up with it worse off than before you took it in. Car mechanics are incentivized by the dealer to push out jobs quickly. This isn't because they are lazy, its because their ability to make money depends on it. That means real fixes are substituted for patchwork fixes.

I don't drive much, but when I do, I like to take my car to a mechanic that I can watch in person make the repairs.

bengl3rt2• 14 years ago

I have always wondered what my recourse is when a mechanic does shoddy work. Can I sue them in small claims court for the cost of repairing damage that their workmanship caused?

In this case I'm thinking of the time just a few months ago when a hose clamp that was misplaced during a cooling system overhaul caused a head-gasket-damaging overheat... which cost $4800 to fix.

protomyth4• 14 years ago

Warranty work (provided free) is one thing, but any service is quite another. If the tire blows out, then I would take it to the nearest goodyear (or whatever comes on a Tesla) dealer. Heck, I wouldn't even think to take a car needing tire balancing to a dealer either.

rscale2• 14 years ago

Interesting. When I talked with a Tesla sales rep I was told that maintenance is annual and would cost me $1 per mile from the dealership. She didn't mention a $600/yr contract.

I'm cautiously skeptical of the 'no tire rotation at other shops' claim. They seems not only like a flagrant violation of Magnuson-Moss, it also seems pointlessly customer hostile. Is there confirmation that this is actually the policy?

andyakb• 14 years ago

Ive never purchased a new car, so could be thinking about this in the wrong way, but isnt $1/mile way way more expensive than $600/yr? $1/mile seems crazy expensive, so I must be understanding that wrong

wahnfrieden• 14 years ago

Unless your dealership is hundreds of miles away...

pandemicsyn• 14 years ago

The 1/mile is just the cost for the service tech's to come to you when theres no maintenance center near you - http://www.teslamotors.com/own/service

Peroni6• 14 years ago

...would cost me $1 per mile

That sounds stupidly expensive. Was that a typo? On a $60k car I'd expect to use it regularly and easily top 10k miles a year.

rscale2• 14 years ago

Per mile from the dealership. I live about 100 miles from the nearest dealership, but I was told they'd come to me for $100 per service. (Presumably there'd also be some sort of variable charge for parts/labor)

The $600/yr contract doesn't really change my opinion of anything (over six years it's $3.6k on a $60-90k car) except to confuse me a bit.

I find the claims about warranties being voided over trivialities much more concerning. If I get a flat tire, I don't want to arrange for Tesla-brand service, I want to fix the tire.

Retric• 14 years ago

That's less than 'standard' maintenance on my 28k Acura TSX. It was a real eye opener to see a 1k bill for standard maintenance on a 2 year old car with 12k miles on it.

clauretano• 14 years ago

That does seem a bit high, especially when you consider that the TSX is what Honda sells as the "Accord" outside of North America. It'd be interesting to see if owners of said "Accord Euro" across the pond see similar maintenance costs.

larrys3• 14 years ago

Not unusual for a high end car. In fact when I had a MB I remember very clearly having to pay for scheduled maintenance that iirc certainly approached $600 per year to maintain the warranty. BMW as others have pointed out includes all maintenance. This is essentially an economic decision on the part of the manufacturer. They could of course increase the price of the vehicle and give you free maintenance but then they would sell fewer cars. Although in general BMW cars actually are priced comparably to MB they have decided that they can sell more cars by including "free maintenance" than lowering the price of the vehicle (at least in the market that I am in it may be priced differently elsewhere).

http://www.mbusa.com/mercedes/service_and_parts/maintenance/...

Cars today are very complex. It is not unreasonable for the manufacturer who is extending a warranty of 4 or 5 years to require you to do certain things to maintain that warranty.

Edit: And to require this to be done at authorized dealerships not the corner mechanic.

paulsutter• 14 years ago

Article has Mercedes costs completely wrong. My S63 has around 50,000 miles on it but I've gone through four sets of brake pads. And mysteriously, the rotors are always "just under spec" and always need replacing too. That's $3000 per brake job, not to mention the myriad other issues they discover on every service. The base price for regular service doesnt begin to cover the costs. Luckily I didn't have to pay for the engine work once to fix a stuck lifter and again when it was spewing oil all over the road. Admittedly, I drive my car a little harder than most, but costs are costs.

I should get my Tesla model S around June and eagerly await the same performance with only $600 a year maintenance.

ValG2• 14 years ago

You must drive your car hard! Do you ask for the brake pads back after each service? By law they have to provide them to you if you ask, and I suspect you will see a decrease in the number of recommendations if you start asking for them back and measure them to see what their specs are. I can't say for sure, but it would not surprise me if they are being over-eager in making their "recommendations".

neya2• 14 years ago

You're not alone. Mercedes is a very shady company, from what I've seen in the past. There is a very good, detailed website[1] exposing their "under-the-hood" tactics. For example, they put so many lives at risk due to a design flaw and secretly replaced certain defective parts under the name of a 'Free Inspection'. This website actually lists more of such tactics.

[1]http://www.thetruthaboutmercedes.com/home.html

larrys3• 14 years ago

"Mercedes is a very shady company, from what I've experienced in the past."

Seriously? Shady company?

You give a site from an obviously very biased operation in India as an example to support your point?

MB sales have increased tremendously in the US since the 1980's. Although I don't own one now I've owned 3 in the past (dating back to the 80's). They aren't cheap to maintain but I've never thought or seen any proof, in the US, of them being labeled as shady by any reputable source. And know many people who buy them year after year.

mikestew5• 14 years ago

Unless you're racing on the track every weekend, that sounds like a ridiculously short replacement interval. IIRC from my professional mechanic days, Mercedes puts some seriously thick pads on their brakes. I recall that they typically didn't get replaced until many miles had passed. As another commenter mentioned, I'd ask for the pads back.

The rotors, OTOH, come out of the factory barely over spec to begin with (I imagine weight savings/fuel economy as one reason). Just a little bit of wear, and they're not worth turning on the lathe.

smithian• 14 years ago

Brake jobs far any expensive vehicle are just short of a scam in my opinion. Do your own brake job (takes about an hour for a complete novice) and save yourself the money.

IanDrake2• 14 years ago

I had a CLK430 and it was like a race car. By that I mean it needed a pit stop every 100 miles. God I wasted so many billable hours in the shop.

Also, the brake dust would regularly turn the front wheels black. I was always told it was the "high performance" nature of the pads.

I drive a Prius now and I still drive faster than 95% of people on the road. I just look like a dork doing it.

krsunny• 14 years ago

Put a spoiler on it

ScottBurson• 14 years ago

Yes, high performance brake pads do make black dust.

periferral2• 14 years ago

i agree the article got Mercedes costs wrong but your comment is on the other end of the spectrum. I've owned 2 Mercs and never had to run through 4 sets for 50k miles, 1 maybe 2 at most. But I do agree that merc dealers charge crazy for a service. I was once told to fork up $1600 for a full service. The local service shop charged me $150 for the same thing.

The article seems to suggest that BMW has a good new car warranty but Mercedes doesn't. All new mercs have 4 year, 50k miles warranty as well.

dkoch• 14 years ago

BMW goes beyond a warranty -- they cover all recommended maintenance items for those first four years (oil, brakes, windshield wipers, inspections).

Wistar• 14 years ago

My ML320 has gone through three sets of rotors and 4 sets of pads in just under 70K miles. About $1500 for each rotor set replacement. I even tried the aftermarket Zimmerman rotors and they were no more long-lived than the OEM rotors.

An S63 costs a lot more to maintain than an ML. Amongst AMG-tuned MBZ owners "AMG" is said to mean "All Money Gone."

By comparison, my Lexus LS has gone through a single set of rotors and an additional set of front pads in 130,000 miles (although it did cost me $6700 at my 90K service[!]).

$600/year doesn't seem that unreasonable to me.

ValG2• 14 years ago

The way they're going about it might not be the right way, but having worked at and run car dealerships, $600/year is not out of line (granted this is based on conventional engine vehicles). The first year of the vehicle you probably won't get your money's worth, but after that it becomes much more valuable. At a traditional car dealership, a 15k mile service is pretty basic, oil change and tire rotation, but they will try to upsell you on numerous other items (special additives to improve engine life/gas mileage, air filter change, wipers, etc...) that will easily hit $250-$300 for that visit. These items can all be done in ~10 minutes at home for ~$50. For a 30k mile service, you're looking at well over $400. To be able to take your car in, not have to deal with the hassle of someone trying to hustle/upsell you, get everything on the car done, road side service, and (hopefully) better service than you'd get at a traditional car dealership? Doesn't seem to me like the price is way out of line.

Not only that, but think about the last time you went to a dealership to buy a car, remember when you went in the finance office to sign the paperwork? More than likely the finance manager was trying to sell you a service contract from a 3rd party that was more expensive and covered less items.

In the end though it's hard to judge the value of these things without having the service contract in front of me, knowing you specific driving habits and exactly what services the contract covers and what services it doesn't (if any). Having said that, I would be highly surprised if 12% of Tesla pre-orders get canceled because of the service contract (as mentioned in the article).

squarecat• 14 years ago

Let me get this straight, people considering the purchase of a vehicle that starts at US$57,400 are balking at a implicit service contract that runs about 50% the cost of their annual Starbucks budget?

These must be the same people that complain about the cost of a 99 cent app for their >=US$200 smartphone.

michaelbuddy2• 14 years ago

Looks like the service contract isn't necessary but you still need to bring it to tesla mechanics for repairs / maintenance and annual inspection to keep the warranty. If I have a warranty to keep my car free from problems, I'm going to use it at the place that issued it. Otehrwise how would I get free warranted repairs?

michaelbuddy2• 14 years ago

A driver of a roadster says when repairs are needed, they come get the car, so it sounds like a way to pay for that service.

notlisted2• 14 years ago

Sounds like he has never owned a luxury car and can't afford a Tesla... (neither can I) If you can can't afford the maintenance, you can't afford the purchase.

Did anyone else have a laugh at "the Volt is among the most complex cars on the road today--far more complicated than the Tesla"?!

Reminds me of my friend who saved up for many years and finally got that Porsche, only to discover that fixing a small dent in the bumper was $2k+. "I don't have that kind of money." Car-poor.

Several years later he bought a house, then got a leak in the basement and the water heater needed replacing... "I don't have that kind of money." House-poor.

toomuchtodo2• 14 years ago

The Model S is extremely simply from a drivetrain perspective. AC motor <-> energy transfer management <-> energy storage

Chevy Volt: AC motor <-> energy storage <-> onboard generator

So I can keep my Model S reservation and shell out $600/year on top of the $50K+ purchase, or I can purchase a Volt and have a generous warranty I don't need to pay extra for.

Hard choice for the practical among us.

reneherse3• 14 years ago

The Volt is even more complex; IIRC in some scenarios (such as when driving at high speed with a low battery) the internal combustion engine can also provide power to the drive train through mechanical means.

aidenn0• 14 years ago

Isn't it illegal to void the warranty on a car for work done, just because the work is done at a third-party shop? I seem to recall this tactic being taken a while bag and it being struck down.

austenallred• 14 years ago

So let me get this straight, you bought an $80,000(ish) car with a full warranty, and you're mad enough about a $600/year add-on in which the company does slightly under $600 worth of work and picks your car up to do so that you write a blog post about it?

debacle2• 14 years ago

That's a very acceptable fee for such a high-tech piece of engineering. Most warrantied commercial equipment has mandatory service contract requirements, so it's no surprise that we're seeing that in the consumer arena as well.

gergles• 14 years ago

No surprise, except for the whole 'illegal' bit.

15 USC 2302(c)

(c) No warrantor of a consumer product may condition his written or implied warranty of such product on the consumer’s using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade or corporate name [... except that some exceptions can be granted if they are in the public interest.]

debacle2• 14 years ago

This isn't about brand, trade, or corporate name. It is about the nature of the service being performed and the fact that very few people are going to have the ability to actually service these vehicles properly.

IanDrake2• 14 years ago

Tesla is not Ford. The numbers are completely different which necessitates a subscription model or higher prices in general. Early adopters shouldn't be surprised when their toys costs more, it's always been that way.

reneherse3• 14 years ago

Let's look at this from a branding perspective: Say in the next year you sell X cars, built on a new technology about which there is some conventional/popular consumer discomfort or doubt.

Is it worth spending 600X dollars of company money for your customers to be able to say, "I just bought a Tesla and I don't have to worry about any maintenance costs at all for the next four years"? For ten thousand cars, that would be six million dollars out of about 800 million in revenue, or three quarters of a percent. Seems like that would be money well spent on developing consumer confidence in the technology and customer loyalty for the brand.

My prediction is that Tesla will change course on there current maintenance program. It's much better PR to offer free maintenance for the first four years, a la BMW, and then offer an extended "Tesla Care" warranty program that continues the coverage, similar to Apple.

Because a true "concierge" level maintenance program wouldn't nickel and dime the customer.

Tesla Model S Service Contract: $600/Year, Or Warranty Voided

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