Tesla’s basic warranty for the Model S covers 50,000 miles or 4 years whichever comes first. You have up to 30 days after that warranty runs out to decide if you want to sign up for their extended warranty (Extended Service Agreement, ESA). I’m at 48,000 miles now and driving most 3,000 miles per month so I need to make this decision soon. I’ll cover my thought process and observations on the extended warranty but keep in mind i’m not a lawyer and while you’ll see my own thought process you’ll have to make up your own mind on it.
The Basics
Tesla’s summary of the extended warranty is pretty clean:
“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 your warranty expires, as long as you purchase this service within 30 days of your warranty’s expiration.”
There are really two key parts to this:
- When you need to sign up and the time period it covers
- That it covers defects in materials or workmanship provided by Tesla
Exclusions
As with any normal warranty, wear and tear items are excluded. Even on a Model S with a limited number of parts there is a long list of things that can wear out with use. Items in this category are tires, shocks, door seals, fluids, the 12V battery, brake pads/parts, filters, etc.
A key point in looking at the warranty value is to remember that you are already covered for 8 years, infinite miles on the main battery and your motor(s). You do not need an extended warranty to cover these key items.
What isn’t mentioned is the UMC (charge cord) or any secondary UMCs you may have purchased.
Costs
The extended warranty costs $4,000 which is about on par with those charged by other premium car manufacturers. The part that is not standard is the deductible:
“The Deductible under this Vehicle ESA is $200.”
While you will only have to pay it once for the part replaced (in case the same part fails multiple times) you will have to pay it for each part replaced. An example is door handles. If one fails, the deductible is $200, if all 4 fail then you’re shelling out $800 in deductible costs. Another point to note is the extended warranty can be transferred to a new owner for $100, but it cannot be transferred to a car dealer/third party.
Caveats
There are the normal caveats on the agreement for using the car normally and not doing dumb things with it and expecting coverage afterwards. There are a few grey areas like adding 3rd part units like dash cams due to this kid of language:
“Tampering with the Vehicle and its systems, including installation of non-Tesla accessories or parts or their installation, or any damage directly or indirectly caused by, due to or resulting from the installation or use of non-Tesla parts or accessories;”
From what I understand of the law its the manufacturers responsibility to prove this is the case and not the owners but there have been reports of non-coverage from dash cams being installed.
The most concerning caveat I ran into was one around regular maintenance:
“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.”
Tesla has been all over the place on recommended intervals. The actual paperwork indicates standard maintenance is every 12,500 miles or 12 months whichever comes first for an annual inspection/maintenance. Tesla employees have given widely different guidance in this area both in written and verbal forms.
I believe the spirit and intent of Tesla is an annual service regardless of mileage and thats the plan i’ve been following (and have confirmed multiple times with my service center), but this wouldn’t technically meet the extended warranty requirements and technically they could refuse service to me. It simply doesn’t make sense when you drive over 2,600 miles a month to do what they call and annual service every 5 months. They don’t have the people or time for that and nor do I.
The Value
Like all insurance, this comes down to a decision or “bet” on whether you will need the coverage or not and if the coverage needed would meet or exceed the cost of the coverage. With standard auto insurance there are a whole lot of good reasons for getting that insurance. With the extended warranties its quite different.
For me, at 32,000 miles a year of driving, the extended warranty will last 18 months. It costs $4,000 (for me this works out to be $222/month) plus the deductible of $200 per item.
To understand better the value here I looked back at the issues that i’ve had with the car over my 18 months of ownership. I should note that other than the annual service cost ($600) i’ve paid nothing for service so far:
- 12V battery failure (7 months) (wouldn’t be covered by extended warranty)
- 17″ screen reacting to static electricity (missing MCU ground) (7 months) (wouldn’t be covered by extended warranty)
- Sunroof rattle on back roads (shims added) (7 months) (wouldn’t be covered by extended warranty)
- UMC failure (8 months) (may be covered by extended warranty)
- Front right tire rubbing wheel well (11 months) (wouldn’t be covered by extended warranty)
- Bad ball joint (11 months) (would be covered by extended warranty)
- Leaky sunroof seal (12 months) (wouldn’t be covered by extended warranty)
- Charge port rings discolored (12 months) (would be covered by extended warranty)
- Key fob falling apart (13 months) (wouldn’t be covered by extended warranty)
- Drive unit failure (15 months) (covered by infinite mile drive unit warranty)
In addition to the list above there were a few Tesla-originated repairs that weren’t things I brought up but service bulletin type things that I hope they would still do.
In 18 months i’ve had 10 issues, 2 or 3 of which may be covered by the extended warranty. One was purely cosmetic (charge port rings). The other two were not. A new UMC is $600, so paying $4,000 for warranty coverage for it makes no sense and its not clear if the UMC is covered. The bad ball joint is really the only thing of significant value that would have been covered and its hard to believe it would cost more than $4,000 plus the $200 deductible to replace it.
So from my history it doesn’t seem to make sense to pay for an extended warranty. But what else could go wrong that is a big ticket item? Here are a few of the bigger ticket items i’ve seen mentioned:
- The 17″ screen could develop bubbles (est. $2,900)
- The main control unit (MCU) could fail (est. $6,000)
Many of the items we don’t know about are tied to the drive unit or the main battery and I assume would be covered under those warranties. There is a real lack of information out there on uncovered repairs which I hope either means they are very rare or that Tesla is covering out of warranty failures anyway. I started a discussion/poll over on TMC which I hope will lead to more information coming out in this area over time.
Summary
So what am I going to do? My high mileage driving greatly reduces the time value of the Extended Service Agreement. Looking back at my history of service and the things that would be covered and the risks of something failing within the next 18 months or 50,000 miles leads me to believe the ESA is not a good investment for me. Should I put money aside for an out-of-warranty repair?
Probably, but my plan is to take the $4,000 I had set aside for the extended warranty and put it in Tesla stock ($TSLA). While the stock is wild, I believe in the company and love the car and I think its a better investment for me than the Extended Service Agreement and has a lot more potential for good returns.