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Tesla Announces No-Fault Battery Warranty; “Valet” Loaner Program

CEO Musk hints battery upgrade program “a good likelihood.”

by on Apr.26, 2013

Tesla CEO Elon Musk with a prototype Model S.

Tesla Motors CEO Elon Musk has announced a series of steps designed to give Model S electric vehicle owners “complete peace of mind” about the durability of their batteries and the cost and convenience of getting the Model S sedan serviced.

Meanwhile, Musk told TheDetroitBureau.com that there is a “good likelihood” that the California-based automaker will eventually offer owners the ability to upgrade their current lithium-ion battery packs as more advanced battery technology becomes available.

The Last Word!

“We’re focused on creating the world’s best factory service experience to match what many have called the world’s best car,” Musk said during a media conference call on Friday.

The Tesla founder outlined a variety steps that will be taken, including a new valet service program in which customers can have their Model S picked up by the dealer, rather than having to take it to the shop.  The valet will leave the owner with a Tesla Model S 85, the most expensive and longest-range version of the battery-electric vehicle, as a loaner.

In fact, Musk noted, “if somebody likes the service car better than the one they’re driving, they can just keep it.”

More accurately, they can do purchase the Model S 85 and trade in their own car. Tesla will pro-rate the trade-in while reducing the cost of the loaner by 1% for every month it has been in use and $1 for every mile on its odometer.

Tesla plans to initially build “about 100” of the loaner vehicles, said Musk, “and over time, several 100,” with each dealer service center holding between two and 10, depending on its level of business.

The new service program also will introduce what the entrepreneur described as a “no-fault battery warranty program” that will cover everything other than a battery intentionally damaged.

“This is trying to address some of the issues people have about electric cars, such as what happens if my battery dies?” explained Musk. “We wanted to say, don’t worry about the battery. Even if the owner does something wrong, the problem will be Tesla’s.”

That’s a significant turnaround from what happened to owners who didn’t fully follow instructions with the original Tesla Roadster. In some cases, they could “brick” their batteries, making it impossible to recharge them. Initially, Tesla told owners they’d have to pay for a new battery.

Tesla is now also reversing its earlier policy of requiring Model S owners to buy an annual service plan. That will no longer be necessary – and not buying a plan will not void the vehicle warranty, said Musk. In reality, he acknowledged, there will likely be little beyond some basic, like wheel alignment, necessary. There is no engine to tune up, for example, or oil to replace.

In a sharp break from conventional industry wisdom, Musk said he has instructed his service team that their goal is to improve Tesla’s customer satisfaction and not to serve as a money-making operation. “Their job is never to make a profit but to operate to the zero-profit point.” That doesn’t mean service won’t help Tesla’s bottom line, however. He noted that while the sales department might win over a customer the first time, it’s the service department that traditionally either keeps or loses a customer when it comes time to trade in,

The new loaner and swap programs will be extended to the Model X crossover that is due out in 2014, Musk said. Some, but likely not all, of the new service and warranty policies will be carried over to a future, less expensive product Tesla is developing, he added.

Musk has often said that he expects to see significant improvements in battery technology in the years ahead.  When asked if that might mean a 400-mile top range for the Model S in years ahead – compared to around 300 today – he responded, “Why not 500?”

He then answered a question posed by TheDetroitBureau.com and said “there is a pretty good likelihood” that Tesla might eventually offer owners the chance to upgrade their battery packs for something with longer range or improved performance.  At the rate by which the technology is improving, he said that might be possible in four or five years’ time.

Separately, Musk noted that Tesla will likely follow trends in the luxury market when it comes to all-wheel-drive. That traction-enhancing technology is all but required in much of the country for high-line brands. Tesla will offer its first AWD model in the form of the upcoming Model S, and Musk hinted that an all-wheel drivetrain might be offered on other models in the years ahead.

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2 Responses to “Tesla Announces No-Fault Battery Warranty; “Valet” Loaner Program”

  1. Jorge M. says:

    How does a loaner car give owners “complete peace of mind”?

    That would suggest that Tesla knows the battery/car reliability IS likely to be an issue and that they are attempting to mitigate the inconvenience that they know customers are likely to suffer. While it’s admirable to offer a loaner as many other car makers do, it would be far better to insure vehicle reliability. Good customer service is their only hope of survival and even that may not be enough when people realize how impractical EVs are for anything but city driving.

    • Michael Strong says:

      Jorge:

      I think there’s plenty of security in knowing that the company will stand by it’s product, including ensuring you aren’t stuck without a car for any length of time.

      Mike