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Live Blog Tesla Announcement April 26 - Elon Musk

Live Blog Tesla Announcement April 26 - Elon Musk

Sara Muron (new) head of corporate communications makes introduction.

Elon:

Design & Engineering
Supply Chain
Factory turn rate of 20,000

Now focus turns to service and warranty
1. 80 fully loaded Model S as loaners. They will available for purchase with discount of 1% per month off of new price.
2. Valet program for pickup and delivery
3. Annual service contract AND checkup is optional. Warranty will be valid.
4. All damages covered including leaving battery at low state of charge.

SamO | 26 aprile 2013

Phil Lebeau What is driving this?

Elon: Service is good but not great. What is the service and warranty program you WISH you could have.

GeekEV | 26 aprile 2013

@SamoSam - Thanks for doing this!

SamO | 26 aprile 2013

Wired: What does unconditional warranty? Transferrable?

Elon: Open the pack, use it for target practice, no intentional damage to the pack then you are covered. Complete piece of mind. Don't worry if you don't read the manual. Any product that needs a manual is broken.

It does transfer to whoever buys it.

Follow Up: What will be the replacement?

Elon: The same or better battery.

SamO | 26 aprile 2013

Q: How many in the service fleet

Elon: First batch is ~100 / 20,000K built.
Several hundred will eventually be placed in service. Whatever is needed to ensure good service.

Q: how many at each location

Elon: how many ever each service centers serve but from 2 to 10

SamO | 26 aprile 2013

Bloomberg News: how long will the service fleet be in operation?

Elon: We don't want a fleet of old loaners. 2-3 months should be the outer limit (with outliers)

GeekEV | 26 aprile 2013

> Annual service contract AND checkup is optional. Warranty will be valid.

Zoinks! I may want to cancel my service contract then...

> Any product that needs a manual is broken.

I've always thought that. Nice to hear someone say it.

SamO | 26 aprile 2013

CNN Money: The battery warranty hasn't changed?

Elon: 8 years stays the same. No fault warranty.

SamO | 26 aprile 2013

Ron White LA Times: Can loaner be purchased?

Elon: Customer can buy loaner with discount on current car of 1%/month and $1/mile

GeekEV | 26 aprile 2013

The warranty bits sound interesting. Can't wait to get more details...

SamO | 26 aprile 2013

Q: Personal backing of trade-in?

Elon: I want to give people piece of mind. Everyone should have the happiest personal transport experience.

Q: Did research into battery life make you change the warranty?

Elon: No battery has ever failed at the module level.

Q: Any accordianing going on for demand?

Elon: These decisions are made independent of demand. Each piece of the customer experience should be world class.

I've told Tesla service division that their job is to NEVER make a profit. Operate the business at the zero profit point.

Regular franchises make most of their profits on the service, not on the sale. This isn't good.

SamO | 26 aprile 2013

Q: What were the problems that drove you to make this announcement?

Elon: This is not tactical. This is a relative focus moving from design, engineering, to service. We've just now gotten to the service portion.

Q: Lots of complaints?

Elon: Some places good, some have had more complaints. Didn't anticipate the mix. LA especially has been working out of 1 center, but we expected to be working out of 3. Permits have been issued so that should be resolved.

SamO | 26 aprile 2013

David Baker SF Chron: Trade-In process? Prorate by mileage and age?

Elon: Usually use automotive leasing guide.

Q: What will be done with used cars?

A: We'll sell them to customers. You'll be able to buy a new or used. It will help affordability in the future.

GeekEV | 26 aprile 2013

> I've told Tesla service division that their job is to NEVER make a profit. Operate the business at the zero profit point. Regular franchises make most of their profits on the service, not on the sale. This isn't good.

Wow... That's a refreshing point of view!

SamO | 26 aprile 2013

Reuters: To what extent was this designed to allay broader concerns?
Do you think the servivce program will spur sales?

Elon: Supercharger announcement (in a week or two) will address range.
What happens if my battery dies? Will I be responsible. This allays those fears Don't worry about the battery. It's going to be fine. As long as you don't INTENTIONALLY.

Mistake with annual service fee mandatory. We're fixing that. This is about giving people piece of mind with their battery.

Future sales: this is important for LONG TERM sales. Sales sells the first car, but service sells all the subsequent cars.

SamO | 26 aprile 2013

Paul Eisenstein Detroit Bureau: Will this service policy also be consistent with Model X and BlueStar?

Will the battery upgradeable? If you wanted to swap for a 400 mile battery.

Elon: What about a 500 mile battery? There is a good chance that this will occur.

Step changes will happen in 4-5 years. Like roadster to Model S.

This would allow to put a LOT more range. So that's probably more likely than not.

I love upgrades. Today is not about that, but that would be a good thing to do in the future.

Model X - yes.

Bluestar - we are trying, but we may have to unbundle some of these things to make it more affordable. But I can't say with certainty.

Q: All luxury vehicles say that 4x4 is a requirement for certain segments of the market.

Elon: Model X will have a dual motor all-wheel drive. Dynamically shift torque at the millisecond level. Much better than mechanical connection. "Mind Blowing"

I don't want to say anything definitive on future models, but I share you sentiment.

teslajolt | 26 aprile 2013

Great news today. I like the idea that I may be able to get into a used Model S sooner.

models60 | 26 aprile 2013

Wonderful news. Love the fact that service is not a profit center, always hated that part of owning an ICE. Love my Model S even more now.

GeekEV | 26 aprile 2013

So is it over now? I'd love to see a formal announcement as I feel like some things were lost in the live blogging of it...

> Wired: What does unconditional warranty? Transferrable?

Unconditional warranty on what? I'm guessing the battery based on Elon's answer.

> Elon: Open the pack, use it for target practice, no intentional damage to the pack then you are covered.

That sentence I think got mangled. The first half is at odds with the second half. Was there supposed to be an "as long as you don't" in front?

KOL2000 | 26 aprile 2013

Elon is Steve Jobs resurrected. I love this guy!!!!! LONG LIVE TESLA

"Any product that needs a manual is broken" - Best quote of the morning

HzSoGood | 26 aprile 2013

Where is the LIKE button???

SamO | 26 aprile 2013

@geek ev exactly. as long as you dont intentionally harm the battery then it continues to be covered

Mark K | 26 aprile 2013

TM is pulling away from the ICEpack.

Seizing the opportunities that gas cannot match.

Bravo Elon, well done.

HzSoGood | 26 aprile 2013

So I have 5 days left to buy my service program. Since I live 15 miles from Menlo and 20 from Fremont, I am assuming the only thing I need to purchase is the 4 year extended Warranty.

Why would anyone buy the optional service plans??? given that they are optional, other than to pay $2500 for a ranger visit?

chicagoniner | 26 aprile 2013

Tesla Service includes:

Annual inspection (or every 12,500 miles)
**Replacement parts like brake pads and windshield wipers (excluding tires)
***24 hour roadside assistance
System monitoring
Remote diagnostics
****Software updates
*New features

*I suppose the "New Features" might provide an incentive.

**Break pads and wipers don't do much to account for the price.

***Roadside assistance is nice but I have AAA for that.

****Software updates if they are only available to service plan at some later date might make it worth it.

GeekEV | 26 aprile 2013

Good question. I've asked about a refund on a plan already purchased...

GeekEV | 26 aprile 2013

@chicagoniner - Good point, we'll need more clarification what their intentions are with "software updates" and *new features".

jk2014 | 26 aprile 2013

Fantastic announcement! Redeemed himself from oversold finance announcement.

Strategic gold. Peace of mind is the mainstream problem with EVs. This just chipped away at that in a big way. Add in the supercharger announcement soon, the road will be further paved for the broader consumer to make the switch without much anxiety. And the hint at a possible 500 mi battery range in the future... watch the f**k out... a trillion dollar industry will be turned upside down in a matter of years and Tesla will have the patents and tech to lead the market instantly. That's the potential here in my mind. Again, strategic gold...

models60 | 26 aprile 2013

@jk2014, totally second your post. I'm pretty sure other car manufacturers would have never dreamed such a smart move, leave alone executing on it. I particularly liked the quote from the call that Tesla Service centers are not profit centers and that is exactly where traditional dealers make their big bucks. Elon and his team keeps impressing with their grand vision and execution. Going to put down the deposit for Model X now that I'm more than loving my Model S.

jk2014 | 26 aprile 2013

Exactly why he can't use the franchise model. EVs most likely will never make money on maintenance, so a totally different business model is required.

Elon's job with the state legislates will be to make this difference loud and clear...

SamO | 26 aprile 2013

@JK2014 You've hit this on the head and this is something Elon should bring up more frequently. EVERYONE I know hates to take their car in for service because it seems like the dealerships are focused on raising revenue when your car is broken.

What choices do we have?

The car needs to be fixed.

Pretty much encapsulates the phrase "over a barrel"

jat | 26 aprile 2013

@EVbugs - you get a discount by pre-paying for the service.

I'm not that excited by the statement -- making the service optional is something that should have been done originally, and they just corrected it. The battery warranty being "more" unconditional is good, but unlike Nissan Tesla doesn't guarantee any given level of battery degradation. So, I don't think it really does much to allay concern of those who are worried about having to buy an expensive battery because it has degraded to where the range is insufficient for their needs.

jk2014 | 26 aprile 2013

Jat -- think you are right on the money. Need to establish what is the acceptable degradation in the warranty contract. How do customers know if its not specified anywhere? This would help with the peace of mind equation significantly for a mainstream car buyer to know what is the base range over an eight year period would be.

jandkw | 26 aprile 2013

After reading the CNN report about the Maintenance Plan is optional, I thought I should cancel my 4 year plan. After some thinking, I know I need my MS to be checked/maintened periodically, if not every year, 18 months interval the most. There is no other car shop, I don't think can service MS cars which required diagnostic equipment, tools and all. After all, the function/feature upgrade may not be included, We'll find out from the official statement.

fmezz | 26 aprile 2013

This is all great, I'm keeping my service plans but what about service manuals or at least maintenance documentation. I think Tesla maybe the only car company that so far refuses to provide this info. Elon, would love to know your position on this subject.

jat | 26 aprile 2013

@jk2014 - read the battery warranty - http://www.teslamotors.com/sites/default/files/blog_attachments/model_s_... under "Battery Limited Warranty"

---
The Battery, like all lithium-ion batteries, will experience gradual energy or power loss with time and
use. Loss of Battery energy or power over time or due to or resulting from Battery usage, is NOT
covered under this Battery Limited Warranty. See your owner documentation for important
information on how to maximize the life and capacity of the Battery.
---

So there is no warranty at all over degradation from normal use. It has to be "malfunctioning or defective" to be covered, and while you might could argue that having 50% capacity in a year is defective, I think it isn't entirely clear you would win that. Nissan had the same problem, where they gave fuzzy numbers and then especially after some people in AZ had battery issues they had to make it explicit. They now say that they will replace you battery free of charge if it falls below 9 bars of capacity (out of 12) within 60 months / 60k miles. We all believe that Tesla will do better than that, and if history with Roadsters is any indication they should, but if they really want buyers to have confidence they need to give explicit protection against premature degradation.

Brian H | 26 aprile 2013

fmez;
Elon said any product that needs a manual is broken. So I guess he doesn't want to issue broken cars.

DouglasR | 26 aprile 2013

@jat - You would still have a very good argument under the warranty if the amount of degradation were abnormally high. The standard you would use in making this case would be based on the amount of degradation experienced by other Model S cars, Roadsters, and other EVs. I know express numerical guarantees would give you more comfort, but you are not without remedies.

jat | 26 aprile 2013

@DouglasR - I'm not the one who needs comfort -- when I bought my Model S, I decided I was willing to buy it even given the risk that Tesla went bust, Superchargers were never built near me, etc. People buying expensive cars are probably less sensitive to price than those buying cheap ones so maybe it isn't an issue with the Model S but it definitely will be an issue with GenIII.

Brian H | 27 aprile 2013

Maybe at some point TM will come up with a number for "normal" degradation per 10K miles or SLT.

TDurden.or.us | 27 aprile 2013

In 10 years, Elon Musk may become (regardless of intent) the richest person in the world.

His leadership -- if he holds true -- will transform one of the largest industries in the world.

I'm 41 years old and believe that I'm now living in what could be one of the most exciting moments in automotive history.

This is going to be a fun ride.

import | 27 aprile 2013

I have had my model S now for about two weeks and EVERYONE who sees it wants one!

If you can financially survive the onslaught of the conventional auto industry for a year or two and especially if you can develop an improved battery which would give 500-600 miles on a charge, there will be NO STOPPING TESLA!

RIGHT ON ELON!