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.

S4WRXTTCS | June 27, 2013

It seems to me that what they're trying to do is charge extra for the one thing they CAN charge extra for (most people probably haven't locked it in) as a way to make up for unexpected warranty claims.

Claims that happened because its a brand new design so of course there are going to be design/production mistakes. I don't think they're profiting in the near term, but its an adjustment designed to save their butts.

I imagine the Pano-roof alone has accounted for a good chuck of the warranty $'s.

Lou in SoCal | June 27, 2013

How owners and in particular early adopters are being treated is very discouraging. I sent an email to George and Ownership. I would encourage everyone to do so as well. It just feels like early adopters are an after thought. I definitely do not like the direction this is going.

rdalcanto | June 27, 2013

Maybe we need dealerships to protect us from Tesla after all....

cybrown | June 27, 2013

What I am worried about is it sounds like Tesla is admitting that more things are breaking than they thought. This is extremely troubling since one of the reasons I decided to buy a Tesla was the expected lower risk of repairs due to a simpler drivetrain. If Tesla can't even figure out how much their own repairs are going to cost them, I am worried.

rdalcanto | June 27, 2013

Kidding of course..., but this sucks. It means long term reliability is not good. $4000 to break even? There go the fuel savings....

markapeterman | June 27, 2013

I call BS on whoever called you - see George's blog post from 11/29/12:

"2013 Model S Price Increase
By George Blankenship, Vice President, Worldwide Sales and Ownership Experience
TAGS: Customers / Model S /


Model S comes standard with a Four Year, 50,000 mile New Vehicle Warranty. An additional Four Year, 50,000 mile Extended Warranty will now be available for $2,500. Please note, this is a “Four Year” Extended Warranty, not two or three years like most Extended Warranties. You will be able to purchase this option through your MyTesla page in the near future.


Our customers are among our most important assets and we will always strive to deliver to them the most innovative cars in the world while minimizing price increases as we have done today.

Thank you,
George Blankenship"

As I recall, this was supposed to be the great precedent for how transparent Tesla would be with annoucing price increases and we generally lauded them at the time. Now, not so much...

I emailed ownership, but if I get the same lame response, I will have to voice my thoughts to George B. as well.

riceuguy | June 27, 2013

Here's what I just sent to George B:

Hi George,

I picked up my Model S in April, and despite some typical delays, minor glitches, etc., I’ve enjoyed my overall delivery and ownership experience tremendously. Unlike many, the issues around fog lights and other controversies haven’t much bothered me. However, I have to express tremendous disappointment in the handling of the extended warranty pricing. I debated including the cost in my financing (an option my credit union generously offers at the time of purchase), but at $2500 it didn’t seem worth it. In fact I decided to mull over the extended warranty in general given that Tesla is so new and we’re basically placing a bet that you’ll survive another 8 years!

Well, I finally decided to go ahead and get the warranty, so you can imagine my surprise when I clicked on “Services Sign-up” only to see a price of $4000! I was even more surprised when, upon emailing Tesla Service, I got a call (nice touch) to say that essentially Telsa never intended to price it at $2500 and it was basically mispriced. Kudos for the phone call, but a major, major let down on the lack of warning, especially considering you yourself announced the pricing in a blog post, the pricing was on the website, and even in the contract. I found this to be a very disappointing response, and while I get that Tesla now realizes the offering was mispriced and appreciate that Tesla intends for service to be revenue neutral, this was still a $1500 kick in the pants that wasn’t planned for and would have been nice to have been able to include in my financing!

A more appropriate approach would have been to provide a brief window (even a week) for early adopters to make a decision without being penalized for Tesla’s miscalculation. I am often a voice of reason in the forums, pointing out the business realities rather than the emotional aspects of many decisions Tesla makes, but I’m afraid the angry mob has it right this time: raising prices on extended service may be the right thing to do, but the cost of allowing a window of amnesty would be far outweighed by the avoidance of negative goodwill created by pulling the rug out from under your most loyal customers. I hope this is the last thing I have reason to write to you about (other than for positive things, like the service and gallery staff here in Austin, all of whom have been just stellar)!


george210 | June 27, 2013

I just checked the Tesla website

and it seems that nothing's changed.
$ 1900 for 4 years 50,000 miles

$ 3800 for 8 years 100,000 miles

Time to stop freaking out!

justineet | June 27, 2013

I think they really mis-priced it at the beginning. If you look at extended warranty prices for luxury cars like Mercedes for instance, for most of their models it costs about 3 thousand to 6 thousand bucks for 3years extended warranty, not 4 years like Tesla. It's probably similar with other luxury cars such as BMW and Audi. I hope though Tesla did not factor in their pricing one time capital expenditures for their service centers, such as one time major expenses for purchase of shop equipments. In my opinion only recurrent costs should be factored in their pricing. Regardless of other luxury cars extended warranty prices, if Tesla is encountering higher service demand than expected, they should work hard to address the root cause to keep service cost as low as possible. For instance if tire wear is one of the major problems, Tesla probably needs to modify their specifications for tire alignment, in particular specification of negative camber. Perhaps they should set the back tires with a lower negative camber spec. or add a camber adjuster to the MSs so owners can adjust the tires to their own spec to ensure the longevity of their tires.

Mercedes...Extended Warranty --- for most of their models...3 to 6,000 bucks for 3yrs!

riceuguy | June 27, 2013

@George210, we're talking about the extended warranty, not pre-paid service.

JohnnyMac | June 27, 2013


You are referring to the service plans. We are all referring to the extended warranty which went from $2,500 to $4,000.

justineet | June 27, 2013

george210.... they r talking about extended warranty, not service plan....I know it's little bit confusing. They are taking about service for material defect, not regular service.

pimp-boy | June 27, 2013

@George210 - Title says "EXTENDED SERVICE PLAN" and NOT "Pre-Paid Service Plans." SCROLL DOWN and you will see what the whole thread is about!

@Jusineet - Whether they mispriced it or not, is their issue. It's fine if they correct it, but w/ a little notice would be appreciated for the price hike with loyal owners and people who take a risk being an early adopter and support them.

create | June 27, 2013

Personally, they need to figure out how to lower their costs rather the easy way out and pass onto us. For one thing, if they improved the quality control coming out of the factory it would go a long way. There is no excuse for the alignment issues (toe out of wack) that several have had that caused premature tire wear. The pano roof creaks should have been caught before the car got to market.
My few cents.

prytog | June 27, 2013

I cannot conceive what kind of costly defect would manifest itself in years 4 to 8, in some regularity, which would cost this kind of money. I expect the car will remain defect free for a long time. My original plan is unchanged; wait until year 3 and evaluate the price of the extended warranty at-that-time as compared to my personal reliability experience and those of others. Then decide to turn in the car or keep for the long run, possibly with an extended warranty.
It's not like our land rover where we replaced the radiator every 18 months under warranty until the extended warranty ended. That was a good deal.

nvjx | June 27, 2013

G. Blankenship also promised a lot of other things in previous blogs - Lighted Vanity Mirrors, Shade for Panoramic Roof etc. I guess a year later the engineers are still designing these things. Well if you believe that then you should not be surprised by his blog earlier about Extended Service Agreement. By the way I bought 4+4 Maintenance Plan and 4 year Extd. Service for a total of $6300 because I feared something like this would happen!

rdalcanto | June 27, 2013

I was just thinking. My 2011 Jeep Grand Cherokee with air suspension, Hemi engine, costly transmission, etc., cost me less than $3000 for a lifetime, bumper to bumper warranty from Chrysler ($100 deductible I think). Why on Earth Tesla would charge $4000 for 4 years, when the battery is already covered and there are so few moving parts, is beyond comprehension....

kawaiia | June 27, 2013

This is so unlike Tesla! I hope they make it right for their hardcore customers whom supported this company and fought for Tesla when they where being attached by the Dealers Associations.

eAdopter | June 27, 2013

I'm so glad I got the three-year buyback option. My optimism for Tesla is fading due to how they've mistreated and cheated some customers on a variety of issues.

This is not how to build the best auto mfg company in the world. This is how to mimic companies that suck.

Tesla advertised that I could purchase the $2500 warranty, but never gave me the opportunity to purchase it at that price (not $4000 either). This is outrageous!

We've been cheated by a company who had our support and loyalty. Sad.

pmppk | June 27, 2013

Wait... this is not cool. I'm taking delivery tomorrow, and was waiting to purchase the extended service agreement until I took delivery. If I had known this price increase was coming I wouldn't have waited... it just didn't make sense to buy a warranty for a car I didn't own yet.

Amped | June 27, 2013

A grace period would have been appropriate for current owners.
I'll be sending an email tomorrow.

justineet | June 27, 2013


I would not really compare Jeep Cherokee with Model S....very different class of cars. Would you compare BMW with Jeep Chrokee?? Another thing you probably know is the "bumper to bumper" warranty is only valid with the original becomes void if the car is sold to another person. Moreover, the lifttime warranty doesn't not cover cost due to normal wear and tear such as replacement of covers mainly breakdowns due part defects. BTW, do u know you sound like a GasHead some ICE dealer or something???

justineet | June 27, 2013


I think they should give to current MS owners and everyone who finalized purchase about a week or two opportuinity to buy the extended warranty for the original 2,500K price. But to give Tesla a little benefit of doubt, it was always stated on their site that the pricing for the extended warranty can change in the future. It's true they should have made that fact well known, but in fine print it was always the case..

kawaiia | June 27, 2013

Can you provide the link to the "fine print"?

kawaiia | June 27, 2013

I found the verbiage for the "pricing subject to change"; it applies to the Service Agreement. I don't see it for the Extended Warranty Plan.

justineet | June 27, 2013

@kawaiia....The first sentence under the "Service Plans" table was always clearly states the prices quoted may change in the future. If I remember correctly, similar wording is also there in the limited warranty contract.

KendallPB | June 27, 2013

The e-mail reply I received sez:

"Thank you for reaching out to Tesla.

The price of the Extended Service Agreement has been changed from $2500 to $4000 to better reflect the services provided by the agreement. Tesla’s extended service program covers the repair or replacement of Model S parts due to defects in materials or workmanship provided by Tesla. Coverage lasts for four years or 50,000 miles (whichever comes first) and begins on the date the warranty expires. The Extended Service agreement can be purchased within 30 days of the warranty’s expiration."

Most of it's fluff except the " better reflect the services provided by the agreement." I was a little annoyed at this reply, but reading the replies since my comment last night, I'm oddly less annoyed. Still annoyed. I put it off since it wasn't practical to buy the extended warranty, and honestly until the 4/50,000 is up, I'm not sure if I need it. Now I regret it, since the price jumped up so much!

I will say, though, that I'm a bit amused. They under-priced it? Well, maybe, but honestly everything they're having to fix now is under the original warranty! They won't truly know whether they under-priced it till they see what issues come up after 4/50,000 (whichever comes first, remember). Heh.

Anyway, I'm disappointed, given their previous heads-up before a price hike. But it seems clear they feel they messed up the initial price, and what was a feature (reading GB's original post about the extended warranty) is now viewed by Tesla as a bug.

Honestly, though--I'm still not sure, maybe we don't need it. I mean will we be finding defects in 4/50,000? A lot of tech tends to show its problems early on. I've never bought an extended warranty for anything, While I was figuring I'd probably get this one when the original warranty ran out, maybe when the time came I wouldn't have bothered.

Sorry to ramble, folks. Kinda thinking out loud here. ;-)

justineet | June 27, 2013

Another thing Tesla could do is offer extended warranty for shorter periods of time like Mercedes does for those who don't want 4 years Mercedes they can offer 1, 2 and 3 years extension in addition to the 4 years.

Tesla4JP | June 27, 2013

Deep breaths.....everyone should take some deep breaths. I hear some voices of calm & reason, but I hear lots more people freaking out!

Yes, it's disappointing, but let's give it some attention and see how things play out. Chances are high that Tesla will do the right thing. Worst case scenario may be that it costs more.

A show of hands....who's willing to give up their MS over this? Not me!
Who has spent more than $1500 already on coatings & waxes & finishes after delivery. Not to mention Tesla luggage, gear, center consoles etc. I've come close.

I'm reading some of your reactions & you'd think Teslas were blowing up or something catastrophic.

"What don't we know??? What aren't they telling us?? What's wrong with the car??"

Let's take this in perspective and not wig out.
That's my two cents.

ddruz | June 28, 2013

I was leaning against buying the extended warranty but was planning to wait till near the end of year 4 to decide. This seals it. I will not buy the extended warranty at that price.

Quick poll: Will you buy the extended warranty at $4,000?

J.T. | June 28, 2013

The thing is even those people who wouldn't have bought it at $2500 would buy it now given the chance. That's marketing.

MandL | June 28, 2013

I'm not really able to afford the extended warranty at either price, so now it just worries me that the company is projecting higher costs (more and/or more expensive failures) than anticipated past the initial warranty period. Since I took delivery in October I won't have much benefit of watching to see what others are experiencing in the way of post warranty failures. At this point, there is no car I'd rather have, but I'm hoping Gen III is available before my original warranty runs out so I can trade down and get a car I can more comfortably afford and will fit better in my city parking pad.

And again, at this point I just wish I had put the $40k deposit in stock instead. I could have bought a perf Model S and gotten my original $40k back. I need to go for a drive and get my mood back up. :-)

bp | June 28, 2013

We should expect the prices of the annual inspection, service plans and extended warranty to change as Tesla gains more experience (the first production Model S is only a year old). Especially for the P85 and P85+ models, the costs (even with the extended warranty increase) still seem reasonable, for vehicles costing around $100K or more.

Locking in the current prices was one of the factors I considered when purchasing both the 4+4 service plan and extended warranty when they were first offered, because I expected those prices to go up (even if it was only an adjustment for inflation).

When compared to the projected maintenance costs of a comparably priced ICE over 8 years, there should still be considerable cost savings - plus the savings in convenience of annual versus quarterly service visits.

However, Tesla should have provided a warning to owners about the price increase and a limited period for purchasing the plan at the original price.

hsadler | June 28, 2013

Yes, I believe when they say it was under priced. I don't have all of their facts to say otherwise.
We are planning to buy the extended warranty - we always do since we are high mileage users. (bmw's cost about $2400). But at delivery we were told there is no need to get it now, wait for when the current one is about to expire.
And yes, we knew price may go up. We can use that money elsewhere and purchase later.

BUT, give us notice, and a chance to purchase pre-increase price!!!

Bad form, Tesla.... Bad form.

herkimer | June 28, 2013

What I find most puzzling about this is that no production Model S is more than one year old as of today. So the original 4 year warranty has not expired yet for anyone, theoretically. (Unless someone has more than 50,000 miles in the first year!) So how could they determine that the price was too low, if extended warranty has not yet been utilized?

Furthermore, the new price implies that extended warranty average utilization will come to somewhere around $1000 per year (if priced to not make profit, as Elon said.) That seems extraordinarily high, somehow. Which makes one think that Tesla is anticipating that some components WILL break down between 50,000 and 100,000 miles and need to be repaired or replaced. Which components would that be? Especially since the battery is under separate warranty.

Unfortunately, Tesla, this move is likely to undermine confidence in the long term reliability of the vehicle, and so will probably cost the company more over the long haul, since it gives potential new buyers more reason for "cold feet," and nay-sayers more ammo to imply that the car is not reliable long-term.

Also, the abrupt and arbitrary nature of this price hike just appearing on the website with no explanation, is damaging. And what is the payoff? TM is going to sell fewer extended warranties with the dramatic price hike, so revenues from this program will probably not increase, may even be reduced, along with customer confidence.

This move really makes no sense to me. Tesla, are you listening? Complaints about communication are frequent.... Please, get a grip on this and understand that customer communication and loyalty is the lifeblood of your company. You would have had better results and more revenue at this point if you were to REDUCE the price of extended warranty, at least until the hard data of utilization begins to come in, somewhere around 3 to 4 years from now!

DouglasR | June 28, 2013

If there's one thing TM should have learned by now, it's that TM customers don't like to be surprised, at least not negatively surprised. This happened when they added a $2,000 price to 60 kWh supercharging. It happened when they deleted the Alcantara headliner for the Performance. It happened when they deleted the fog lights. And it's happening now, with the price increase for the extended service agreement.

People like to have notice of these things. It can't cost them that much to give notice, after which they are perfectly within their rights to raise prices. Think of the cost of notice as advertising, as the purchase of good will. It takes a lot to build good will, but so little to destroy it.

Those of us in Washington and several other states never had the opportunity to purchase the extended warranty at $2,500. I would have done so at the same time I purchased the service plans. Count me disappointed.

I am 3146 | June 28, 2013

I thought the Warranty was reasonable at $2500 and I think $4000 is reasonable. If the 17" display were to fail after the original warranty, what do you think the cost of replacing it would be?

David70 | June 28, 2013

Yep. But the thread title doesn't say that.

TeslaModelSOwner | June 28, 2013

I think the point here is not whether the new price is reasonable or not, but that they changed it without notifying anybody, especially those who planned on staggering out their cash outlay over a period of time.

Secondly, by saying this reflects the true cost to Tesla, it implies that the product is not expected to cost $4000 due to failewd parts etc over 4 years which is probably not the right message to be sending the market.

To make this right Tesla should make an annoucement to give folks a 1-2 week grace period to purchase the warranty at the old price and then do the price increase.

Tesla, there is still opportunity to make this right...

justineet | June 28, 2013

@imherkimer.....I think you r missing what they are trying to's not necessary for them to wait for most of the original warranty to run out to have a feeling how much service would cost. They can have a good idea based on the services they have been giving for the past year. Your suggestion for them to wait until the original warranty runs out does not make sense if the pricing is indeed seriously flawed. Your suggestion will allow lots of buyers to lock in extended warranties at too low of price which is what Tesla is trying to avoid.

David Trushin | June 28, 2013

First, those of you that were planning on waiting until year 4 to buy this extended warranty are surprised at the price increase? Did you think it would still be 2500 in 4 years?

Second, it isn't worth it at 4000. It's not worth it at 2500. I would just ignore this warranty and move on.

Third, some of the people complaining about how they wanted to buy this are the same ones who were saying they wouldn't buy the service plan and would just not service the car. I'm confused.

sia | June 28, 2013

I made the decision not to buy the Extended Warranty, and I am still comfortable with that decision.

I think what we want, most of all, is for Tesla to be financially viable and successful, to service our wonderful cars and offer new amazing vehicles in the future. So if financial planning requires raising the price of Extended Warranty now, I trust Tesla’s judgment and intentions.

I understand that some people are disappointed not to receive an advance notice, but with all the work going on at Tesla, we should give them a break. They are producing an amazing zero-emission vehicle despite all the obstacles; everything else is secondary. 

jzahrt | June 28, 2013

Elon - Please rehabilitate the image hit that this is costing, do the right thing, and give us a week or two grace period. As DouglasR stated above, "People like to have notice of these things." We understand that prices need to go up from time to time, but don't treat us like an equation when it needs to happen.

stevenmaifert | June 28, 2013

Because there is zero life cycle reliability data available for ModS, I purchased the extended warranty as a hedge. It's like an insurance policy; you hope you don't need it, but if you do, it's there for you. I've owned my ModS for six months. It's been to the service center twice for warranty replacement of defective materials. Not a good start.

J.T. | June 28, 2013

@sia If Tesla agrees with you that customer goodwill, communication protocols, transparency and efficient business practices are all secondary to producing a great technological product then the consumer will be secondary as well. So who's going to buy the excellent product, other machines?

Customer goodwill is essential for new technology. Tesla is on very shaky ground and as many have pointed out they've been given a number of breaks already.

justineet | June 28, 2013

I agree they need to give a week or two grace period for those who have already finalized order or purchased Model S.

JohnnyMac | June 28, 2013

David T. Re your point, I think that it is safe to say that most of us would have expected "reasonable" price hikes over time. I don't for a second believe that anyone considering the warranty as I was at my 33rd day of ownership would have or should have ever anticipated a 60% increase this early in the game. It is made worse with no notice being given to loyal customers. Many of us made MS purchase decisions based on a lower cost of ownership (and yes, that includes consideration for the lack of moving parts and related failure and repairs that were part of the Tesla sales pitch). I had planned to insure against that at what I felt was a "fair" $2,500 fee for an additional 4yr/50k and that was all factored into my purchase decision. Now Tesla chanegs the game substantially and implies or states (not sure which) that this will not be the case so they raise the warranty cost $1,500 without any notice to customers to allow them to purchase before the price increase. For the record, when I inquired with Tesla about the warranty early on, I was told I could add it any anytime within the 4yr/50k warranty. I expected if I delayed my decision I may see some nominal increase by not this. I emailed George with my thoughts and I hope others do as well. I have put up with a lot that is somewhat outside of the control of Tesla or which may be a function of growth pains or system and communication issues but this one is fully within their control and they have not served their loyal customers well with this move. Not well at all! I expect better from Tesla.

bpo | June 28, 2013

I am ready to place an order and then this happened. I am concerned for two reasons. First, I liked the idea of buying the warranty and 8 years of service, knowing that I would not have any surprises for 8 years or 100K miles. The cost of buying this piece of mind just went up. Second, it feels like Tesla has less confidence then they have shown in the past. Having a low cost for the warranty and standing behind the car for 8 years is important for a new car company, now they seem to be backtracking.

Duffer | June 28, 2013

What is all the angst about? If you go to the "Buy" tab and click on "Service Plans", you will find the following line just above the $4,00 price for the Extended Service Agreement: "Purchase prior to July 3rd and pay only $2,500. After July 3rd, price will increase to $4,000."

This is not a price increase with no notice -- read it all for crying out loud.

Debate all you like as to whether it's worth the price, but don't go bashing the company for not providing advance notice.

justineet | June 28, 2013

@rdloftin....ummmm I did not notice that yesterday....they must have added that just today after getting feedback from customers. That is good move...