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Extended service agreement price hike?

Extended service agreement price hike?

I could have sworn the price I saw last week was $2500 and when I just checked it, it was $4000? I just filled out my delivery survey. Could that have jacked the price or did I just have poor timing?

Update: This thread came to Elon's attention and Tesla Motors came through and gave us all a grace period to buy the ESA at the $2500 price.

Brian H | June 28, 2013

That's what it says, but previous feedback suggests that relocating the vehicle is the real concern.

J.T. | June 28, 2013

@SCCRENDO

It had to be purchased within 30 days of taking delivery. I have 19 days left on my dashboard.

irishstoutaz | June 28, 2013

Just so everyone knows... The price dropped back down to $2,500 this afternoon in our Sign Up for Service link!! We went ahead and purchased the Service Plan and Extended Warranty (Service).

Maybe all of the complaints about no notice made them drop it back down.

SCCRENDO | June 28, 2013

Pity I didn't realise you had 30 days to sign up for the services. I would have signed up. I do about 25,000 - 30,000 miles per year which would have meant servicing every 6 months. So thy may have done me a favor and perhaps I will service every 9-12 months. Anyone have a service yet and know what they do. I suspect as long as you rotate your tires which could be done anywhere the 12,500 service requirement is probably not a magic number. I will probably sign up for the extended warranty now they have dropped the price although to me it is probably going to be less than 2 years of extra warranty. Anyone with any experience with services.

kjin7117 | June 28, 2013

The extended warranty says if you don't service the car within 1000 miles of their recommended 12500 mile interval or within 30 days of their 1 year interval the warranty may not be valid. Am I reading this right?

Chuck Lusin | June 28, 2013

Purchase prior to July 3rd and pay only $2,500. After July 3rd, price will increase to $4,000.

essendon2000 | June 28, 2013

It is stipulated in the ESA that the vehicle has to be brought in for the "yearly or every 12500 mile" service/inspection for any potential repair work to be covered under ESA.

Does that same requirement apply to the original 4-year/50000 mile warranty?

The way i interpret it is even if you have the ESA, but you don't have records to prove that you have diligently kept up with the recommended scheduled inspection from day 1 of ownership, you will be paying out of your own pocket, ESA or not (after 4 year or 50000 mile). Obviously, one has to keep this up till ESA expires to take full advantage of the warranty.

So another way to look at this is ESA and the prepaid service plan kind of go hand-in-hand. $2500 + $1900 + $1900 or you don't buy any coverage at all

Pungoteague_Dave | June 29, 2013

Essendon, that clause in the ESA was voided when TM announced that the service/inspection is no longer required in order for the warranty to remain valid.

J.T. | June 29, 2013

@Pungoteague_Dave

I hope you're right about that because the ESA says this

No person has the authority to change this Vehicle ESA or to waive any of its provisions. This Vehicle ESA is for the sole benefit of the purchaser and applies only to the vehicle for which it is purchased.

teslagma | June 29, 2013

I saw my first Tesla MS at the Detroit Auto Show in 2010---my jaw dropped and I fell instantly in love! Everything I learned about the company and about Elon just reinforced my feelings. I was sooo disappointed to hear about the service plan price increase. I've been waiting to post until I actually ordered my car, but I'm still saving for the down payment and will be for a while. I sent the following e-mail this morning:

Mr. Musk and Mr. Blankenship: I've been planning to buy a Tesla since seeing one at the 2010 Detroit Auto Show, and I've been following the forum ever since then. I bought stock after the IPO, and I have been so very proud of the car and the company, talking about it so often that my friends and family are tired of me. I've watched every video I can find on interviews with Elon and have been so proud of him and his integrity and vision!

I haven't purchased my car yet because this is a huge expenditure for me. My income is around $50,000/year, and I've been saving for a long time because I really, really want a Tesla. My test drive appointment is in Chicago at noon on July 2nd (my 65th birthday) and I can hardly sleep.

I have to tell you though, that I feel betrayed about this service plan price increase. This is so not like the Tesla company of which I have been so proud! And as I read all of the posts on this thread, I see so many of the names of people whom I've come to know (via the forum) over the years, who have always been so excited and proud and supportive of the Tesla family. They are also shocked and disappointed. It doesn't speak well of the confidence that the company has in the quality of the car if the service costs are expected to be so high that you need to take a step like this and risk alienating so many loyal supporters. Especially that it was done in such a sneaky way, with no advanced warning to customers who have ordered their car or who already purchased their car but were waiting to purchase the service plan - shame on all who made this poor decision!

Sincerely,

Jamon | June 29, 2013

I just bought the plan. How cool is it to see the big, bold PayPal logo at checkout? It will be like in a couple decades when we're colonizing mars through SpaceX, and Elon tells the team "make sure we get some hyperloop stations set up along the west side of this settlement." It's all brilliant!

AmpedRealtor | June 29, 2013

@ Pungoteague_Dave, Elon Musk announced on 4/26 that annual service was not necessary in order to be covered under the manufacturer's warranty. He didn't say anything about the ESA, specifically, and I would basically have this advice: if you buy the ESA, you are agreeing to the language printed on the ESA. As it currently stands, the ESA you agree to (in writing) stipulates the annual service requirement. My advice would be to get clarification on this before buying. If correct, the true cost of the warranty is not $2,500 - it's actually $6,300 once you add in the mandatory annual service.

Since the service policy changed on 4/26, I'm sure they would have made the change to the document by now since two months have passed since the announcement.

J.T. | June 29, 2013

@AmpedRealtor. I'm reading it the same way as you. Plus, towing if the car is immobilized, all the reasons why the work might not be covered.

I'd rather trade it in after 4 years if the expenses prove to be excessive for those before me. This forum will definitely be the place to find that out.

teslagma | June 29, 2013

So I sent my e-mail expressing my disappointment with how the service plan rate hike was being handled, and within an hour, I got this response from George Blankenship:
Hi Marianne,

Thanks for your note. It is appreciated. I am always happy to hear from customers.

I'd like to share three quick points…

First, we recently announced that annual service is not a requirement on Model S. We encourage people to do it, but unlike all other car companies, it does not void your warranty if you choose not to do annual service. This shows that we have a lot of confidence in Model S and how it will perform over time.

Second, we believe the new price of our extended service plan on Model S is very, very competitive with other cars. Most premium sedan extended service plans cover three years, not four. Ours covers four years and is priced very competitively with others that only provide three years of coverage.

Lastly, we posted the following language on our website yesterday that does give owners a period of time to select our extended service plan at the original price:

"Tesla is offering a grace period for extended service agreements purchased on or before July 3rd at the previous $2,500 price. After July 3rd, the price will increase to $4,000. Extended service agreements cover the repair or replacement of parts (unless due to a collision) for an additional four years or 50,000 miles following the initial warranty expiration.

Customers who purchased agreements in the past two days at the higher price will automatically receive a $1,500 refund within one week. There is no need to contact us to receive this refund.

Tesla will continue to provide reasonable notice for changes to the base price of Model S or to a large group of options, balanced by the desire to keep unnecessary emails to a minimum."

Thanks again for your note. I hope this explains our thinking on this, and I truly hope you enjoy your upcoming test drive…and have a very Happy Birthday!!!

Have a great weekend!

George

emoflash | June 29, 2013

I don't have an option for the extended warranty on my page. I live in WAshington state and i recall someone earlier mentioning the extended warranty wasn't available in Washington. Does anyone know why?

jjaeger | June 29, 2013

have been searching (via volkerize) for this question - but have come up short, so will ask here. Thought I remember earlier thread noting that the air suspension was not covered with the ESA. Reading the agreement I can not come up with this determination. Any informed opinion either way on this? TIA.

JohnnyMac | June 29, 2013

jjaeger, good question. I saw shock absorbers listed on the excluded items list. That said, I don't believe the air suspension technically has shocks - it is based on a system comprised of an air compressor, air lines and air struts so I would believe it all should be covered. I am sure the experts will be along to chime in on this soon though :)

I am still trying to determine if the Tesla statement that "service is optional, and has no effect on warranty" applies to the ESA as well as the standard 4yr/50k warranty? The language in the ESA is quite contradictory given this statement. Are the any good contract lawyers here who have a look at the ESA agreement and render an opinion?

If it does apply, there are no issues. If not, you have to be religious about the annual or 12,500 service schedule or you will NOT be covered for anything at all (per the ESA language). Not sure how to interpret this. Anyone?

akikiki | June 29, 2013

TM is a marketing genius.
Sometimes they know better our own minds or choices than we do.
The minimalist interior of the MS that many of us once thought too lean is in fact now, perfect to us.

I am not implying they are deceptive. They see the big picture.
Sometimes we consumers are on the fence and need a push one way or another. Sometimes TM knows what we need better than we, or before we know we are going to like it.

Dad gave me a bicycle for my birthday.
And I didn’t ride it as often as he thought I should.
Dad figured that I didn’t value the bicycle as much as he valued it. And unexpectedly, Dad took it away. And he took away where I couldn’t see it any more. It’s wasn't available to me. Only after; did I miss it. Want it – Had to have it. Now that I couldn’t have it, I wanted it even more. So Dad apologized for taking it without warning me, and I forgave him for not warning me. And then he gives it back. We are right back where we started but suddenly the bicycle has far more value to me. It’s precious to me.

The Extended Warranty was available to us. We could buy it.
But do we need it? Don’t know, maybe. (Straddling the fence.)
But when it’s taken away from us, (price increased) without warning, we want it.

Now we wish we had taken purchased it when it was cheaper. We say to ourselves, “if I had one more chance, one more opportunity to buy it when it was cheap, I would.

Then our superhero, GB steps out of the mist, whips out his trusty sword and slashes the price back to the pre-increase price. Da-Dah, and like that we are both grateful and ready to buy. Given our one more chance, we now are not only ready to buy, but thankful to TM that we have a chance to buy it. Those that were on the fence, are no longer straddling the fence, the decision is much easier to make.

Regardless, TM and GB. Thank you, you made the decision easier.
And I trust TM. TM has always done the right thing for all of us. TM is like family, (only better).

zheng94402 | June 29, 2013

$2500 to 8yrs/100K miles is a very good deal for this class of cars.

If you look at BMW Platinum Coverage, the MSRP is around $4000 for 7yrs/80K miles. You can probably get it around $3200. The new price $4000 is still competitive with BMW etc.

It's an insurance. Hopefully, we dont need it but if anything breaks after the 4yrs/50K warranty, any repair will be expensive.

jjaeger | June 29, 2013

akikiki - your post seems like deja vu, just not sure why.

AlMc | June 29, 2013

I agree that some notice should have been given about the service extension increase. However, how often does a car manufacturer listen to the logical concerns of owners and take steps to rectify a bad/misguided decision.

The mark of a good company is not how they handle success but how they handle adversity (even if created by themselves).

I just signed up for the extended service at 2.5K. I intend to invest the other 1.5K in Tesla stock and expect (hope) that over the next four years it will pay for the extended service price.

JohnnyMac | June 29, 2013

Okay, since akikiki is reposting in full, I am reposting in part since I think there is a critical issue in play here for anyone considering the ESA.....

In short, I am trying to determine if the Tesla statement that "service is optional, and has no effect on warranty" applies to the ESA as well as the standard 4yr/50k warranty? The language in the ESA is quite contradictory given this statement.

If it does apply, then there are no issues with if or when you service you MS. If it does not apply, every ESW purchaser needs to know that they need to be religious about the annual or 12,500 service schedule or you will NOT be covered for anything at all (per the ESA language). At least that is how I read it.

Thoughts?

Brian H | June 29, 2013

jjaeger;
Because it's a paste of a previous comment. Bad form.

The first sentence is non-grammatical and unique. (A genius is a person, and TM is not one.) ;P

AmpedRealtor | June 30, 2013

Another data point… the ESA is transferrable to a new owner but is not transferrable to another vehicle. So, for instance, if you decide to purchase a P85 loaner vehicle, your ESA will not transfer. At least not according to the wording of the ESA.

DouglasR | June 30, 2013

@Amped - But if the ESA increases the value of your MS, that should be considered in determining the price to trade up, no?

JohnnyMac | June 30, 2013

Great point Amped! I am still trying to get my head around the issue raised above by @Pungoteague_Dave and @jtodtman as to whether annual service is required to mainatin and receive repairs under the ESA.

Below is an excerpt of what appears to me to be the the critical language. I would suspect Pungoteague_Dave is correct in that service is no longer required. My opionion is based on the current Tesla service policy and declared position that "service is optional and has no effect on warranty". One would still be following the recommendation of Tesla as specified and required in the ESA if one deferes or does not at all service the vehice.

Anyone agree or disagree with this opinion (and it is only that, an educated opinion)?

-------------------------------------
C. Your Responsibilities
The Owner’s Manual includes specific recommendations regarding the use, operations, and maintenance of the Vehicle. To maintain the validity of this Vehicle ESA, You must follow correct operations procedures and have Your Vehicle serviced as recommended by Tesla. If requested, proof of required service, including receipts showing date and mileage of the Vehicle at the time of service, must be presented before any repairs under this Vehicle ESA commence. Service within 1,000 miles and/or 30 days of Tesla’s recommended intervals shall be considered compliant with the terms of this Vehicle ESA.

Brian H | June 30, 2013

The motivation to get service is to keep the car in peak condition when in use, despite being in use. The warranty is to deal with manufacturing flaws.

JohnnyMac | June 30, 2013

I am with you on that Brian H, but the question at hand is whether either deferring or not servicing the car in accordance with Tesla's stated policy, voids the ESA? It clearly does not void the original warranty but how about the ESA? Thanks!

Brian H | June 30, 2013

Don't know. Probably. Letting solvable problems "fester" deliberately seems like it would void the ESA. I.e., the ESA won't pay for 9 stitches because you couldn't be bothered with a stitch in time.

JohnnyMac | June 30, 2013

Right Brian. I would never let problems fester. I would address them under the original 4yr/50 (or via service if necessaty, but service is not necessary according to Tesla). However, if you believe that the language in the ESA prevails, then if you service later than every 13,500 miles or 13 months, then Tesla can deny any ESA claim. If you believe however that the statement that "service is optional, and has no effect onwarranty" prevails as @Pungoteague_Dave suggests, then no service whatsoever is ever necessary to maintain the EVA and receive service thereunder. I just cant determine which it is! Thoughts?

tobi_ger | June 30, 2013

Has anyone contacted Mr. Blankenship for a clarification of these important details?

J.T. | July 1, 2013

@Brian H

Poor Richard notwithstanding, I'm pretty sure no one would let an obvious problem (torn seam in your analogy) fester. The question is can the service of the car discover a critical problem that is otherwise undetectable to the driver? And if this is the case that problem could fester for a year in between services.

I just don't think a situation that could void the ESA could only be discovered with regular service visits. Of course, if a driver ignores an obvious problem then he shall reap what he sows.

cfOH | July 1, 2013

There are a great many non-drivetrain parts on a car that can fail prematurely after 4 years have passed, such as bearings, steering components, suspension, interior elements, etc., that the MS still has. I drive less than 7,000 miles a year (although I understand that may be increasing after mine's delivered later this month ;-), so my warranties usually die because of age rather than miles. Also, I can only imagine how much TM would charge to replace the touchscreen, and I don't think I've ever owned a monitor, let alone a touchscreen monitor, that I used daily that lived more than 5 or 6 years. So, for me, the ESA seems totally worth it. My only concern is where TM will draw the line between "manufacturing defect" and "normal wear and tear," as who's to say how long a bearing or a touchscreen should last?

JohnnyMac | July 1, 2013

@cfOH. Looks like they address that as follows:

“Failure” means the complete failure or inability of any covered part to perform the function(s) for which it was designed due to defects in material or workmanship of any parts manufactured or supplied by Tesla that occur under normal use. Failure does not include the gradual reduction in operating performance due to normal wear and tear.

The fact is, that there are many grey areas in which companies can argue warranty coverage. Resolution often comes down to a combination of both one's credibility in articulating one's problem, and the general character and approach that an organization takes toward servicing their customers. Tesla has proven to me to be exemplary in this regard so far and I would expect that they will continue to be as they differentiate themselves, grow their business and steal market share from their competitors (most of whom don't behave this way, by and large).

@jtodtman. I had an e-mail dialogue going in parallel with George B. on this since I felt like it was potentially a major point of contention down the line for Tesla and anyone who may have purchased the ESA. He essentially confirmed this morning that the warranty agreements take time to revise and require multistate approvals, which they have received, but not yet incorporated into the agreement itself. He also confirmed that Elon has commented publicly on this matter himself, and then went on to confirm soecifically that service is not required to maintain the ESA.

This makes complete sense to me, and is totally consistent with their position on service/warranty. Case closed as far as I'm concerned. I am completing my warranty purchase this morning.

AmpedRealtor | July 1, 2013

I'm getting this warranty as well, if not for the mere fact that I can buy for $2,500 something that Tesla values at $4,000.

J.T. | July 1, 2013

@JohnnyMac I appreciate you getting us an answer to that while the option to buy at a discount is still open.

@AmpedRealtor I'm not quite sure what your config is but if it's a 60 or an 85 there's a chance you might want to take advantage of upgrading through the loaner/purchase program before your 4 years are up. The ESA is not transferable to another car, only another person.

JohnnyMac | July 1, 2013

Happy to share @jtodtman. Just giving back a small amount of what this forum has given to me since joining. Appreciate all of your contribution as well!

AmpedRealtor | July 1, 2013

@ jtodtman, thanks for the tip. I'm getting a P85 so I hopefully won't feel the need to upgrade. If I do end up selling my Model S down the road, having the ESA would add value and seal the deal for a prospective purchaser. I wish I had a crystal ball… :)

Brian H | July 1, 2013

An ounce of prevention ...

New tech, new model, new exigencies.

how27udo | July 2, 2013

it stated very clearly on the Canadian website that the price change will Occur on July 4th 2013 so there is still time for folks who are still interested.

AmpedRealtor | July 2, 2013

Here's a funny thought… what if on Friday Tesla announces no price change to the ESA, citing "higher than expected demand, therefore margins have improved and the price remains unchanged."

I smell a master plan… LOL

AmpedRealtor | July 2, 2013

If you couldn't tell from my previous, cynical post - I just bought the ESA. The first extended warranty I ever purchased was AppleCare for my iPad last year. To that point, I had never purchased an extended warranty and always thought they were a rip off. Well guess what? My best front dropped my iPad last September face down onto pavement, then tripped and stepped on it, her and the iPad sliding along the asphalt for about 2 feet. AppleCare instantly paid for itself and I now have a lovely, smashed iPad as a centerpiece.

Today I find myself in the position of buying an ESA for a vehicle when I have never done so in the past for any of my other cars. But none of my previous vehicles were breakthrough, first-of-their kind technologies to be mass produced for the first time. Hopefully my Model S will fare better than the iPad… :)

AmpedRealtor | July 2, 2013

OMG "best front"="best friend"

cfOH | July 2, 2013

Tip: Don't let your best friend borrow your Tesla. :-)

Brian H | July 2, 2013

You sure had me wondering about possible origins of that phrase!

JohnnyMac | July 2, 2013

Amped.

Funny thing is, I would still feel good about the purchase at $2,500 even if they do enact the master plan and maintain the current rate, at least as long as I don't trip and step on my Model S :)

Bighorn | July 2, 2013

@AR
Please post pics so we can determine for ourselves if "best front" is in order.

KendallPB | July 3, 2013

I bought it in late afternoon and was glad I hadn't missed my chance . . . yeah, I'm a last-minute kinda guy sometimes. ;-) I went back 'n forth on it, but ultimately decided it was a good idea. We'll see how it plays out in 4, 5, 6, 7, and 8 years.

Party on, Teslans!

subug | July 3, 2013

I came to know about the price increase yesterday and sent an email to ownership. A Tesla representative called me today and confirmed that the price was indeed going up tomorrow and that I had till midnight today to purchase at $2500. I just went to the site to purchase the ESA and it now shows the new price of $4000. It's 10:50 PM now in California. I sent an email to ownership about this and I got an automated reply that they are closed for 4th of July. Not sure what's going to happen now! Anyone else in a similar situation?

ltilliss | July 3, 2013

@subug
I found the same thing when I tried to purchase the ESA at 11:00PM MST. (10:00PM California) Perhaps the price changed at midnight EST but all it said was "July 3". I emailed customer service as well.

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