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Tesla Model S now has infinite-mile warranty

Posted by Nick Statt @nickstatt on Sunday, August 17, 2014 Under: 848FINACE

Electric-car maker extends drive train warranty to match that of its battery pack: Both components now have eight-year warranties and unlimited miles driven.

Tesla Model S sedan. CNET

Tesla Motors has extended the drive unit warranty of its Model S vehicle to match that of its battery, meaning both components of the all-electric sedan now have eight-year, infinite-mile warranties.

The Model S drive unit for the 85kWh model, prior to the warranty extension, came with a four-year, 50,000-mile warranty, while Tesla owners had the option of extending that to an eight-year, 100,000-mile warranty for $4,000. With the new warranty changes, Tesla will now service Model S units' battery packs and drive units within eight years of purchase for free and regardless of mileage.

It is unclear whether the warranty extends to Tesla's lower-end, 60kWh model. CNET has reached out to the company to confirm the limitations of the new warranty.

"In hindsight, this should have been our policy from the beginning of the Model S program," CEO Elon Musk wrote on the company's website. "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."

As Tesla gears up its Fremont, Calif., factory to produce both more of its $70,000-plus Model S sedans and its forthcoming Model X SUV, the car maker is going to great lengths to maintain its strengthening reputation, one tied to an ever-climbing stock price floating near an all-time high of $262. That means calming critics that have begun to clamor about the car's uncomfortably high number of service needs.

Consumer Reports, which gave the Tesla Model S a record-breaking score of 99 out of 100 last year, criticized the car's reliability last week, noting that its "test car has developed many minor problems that merit some reflection." Edmunds.com returned its test car after 28 service incidents, all of which fell under Tesla's warranty. That included three drive unit replacements, as well as a new main battery pack and a new 12-volt secondary battery.

While the new warranty will not aid Model S units in overcoming these apparent reliability issues -- which Consumer Reports stressed were, at the moment, "purely anecdotal" -- the move is aimed at helping calm the nerves of prospective Tesla owners who may find the number of fixes needed in day-to-day use too daunting to plunk down between $70,00 and $100,000 for the all-electric car.

The new warranty will extend retroactively to all Model S vehicles ever purchased, and there is no limit to the number of owners eligible for the warranty benefits. Musk told Tesla investors that the decision would dampen the company's profitability in the short-term:

"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."

Telsa stock closed up 0.24 percent, or 63 cents, to $262.01 and is down .04 percent, or 11 cents, in after-hours trading Friday.

In : 848FINACE 

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