Tesla has made another interesting move pertaining to its post-purchase service, as the company appears to have significantly altered the terms of warranties for any used models. The new warranty terms are significantly less beneficial to consumers buying used EVs directly from Tesla, and while the company has not given any explanation for the change, it does come at an interesting time.
Tesla has seen strong growth in its manufacturing and market share during the past fifteen years. This has helped skyrocket the company, along with the clean energy and electric vehicles trend, immensely. Just this year, Tesla surpassed Toyota as the most valuable automaker in the world. That being said, Tesla appears to be making some in-house changes, especially as it relates to benefits to customers. Just last week, the company removed its confidence provoking, seven day "no questions asked" return policy from its website without offering an explanation or a replacement policy. With the updated warranties coming just days later, there are clearly some changes happening inside of Tesla HQ. However, it's more than likely less of a tell that things are amiss internally, and more indicative of the restructuring of a company that's expanding at top speed.
According to Electrek, Tesla used to offer a two to four-year warranty on used Model S and Model X EVs, depending on how old they were at time of delivery. For instance, any Model S or Model X that was under four years old and under 50,000 miles at the time of Tesla delivery was protected by a "Used Vehicle Limited Warranty" for four years or 50,000 miles, whichever came first. For any Model S or Model X over four years old and 50,000 miles, but under six years and 100,000 miles, a "Used Vehicle Extended Limited Warranty" previously provided coverage for up to two years or 100,000 miles after delivery, whichever came first. Tesla has now updated its used vehicle warranty to only one year or 10,000 miles of coverage after the original basic warranty ends.
Not An Issue For New Buyers, But For Used Teslas?
Currently, all Teslas are delivered with a "Basic Vehicle Limited Warranty" that offers coverage for four years or 50,000 miles. With Tesla's new used warranty, customers will still receive remaining coverage on their used Tesla for whatever remains of the initial four-year period. Then, on top of that, they will receive an additional year of coverage or 10,000 miles. Considering that Tesla's two most affordable vehicles, the Model 3 and the Model Y have not even been in production for four years, the new warranty could actually be pretty beneficial to those buying newer used Teslas. That being said, the new warranty puts a real damper on the incentive for customers to purchase any used Tesla's that were delivered in 2016 or earlier e.g. The Model S or Model X. This warranty could shift how and where people get their Tesla's moving forward.
First of all, the warranty change focused on its more recent models tends to fit the narrative of Tesla distancing itself from the older versions of the Model X and Model S. As the brand's two most expensive vehicles, Tesla has put a much bigger emphasis on sales of the more affordable Model 3 and the smaller Model Y. The Model 3 is currently the best selling electric vehicle of all time and is a major money maker for Tesla at the moment. With a potential $25,000 Tesla in the works, the manufacturer is focused on affordability and quantity in the future, and it's clear the older Models will never gather that large of a market share, given their price.
Due to the fact that this new warranty diminishes any hopes of additional coverage for older Teslas, expect used EV consumers to gravitate more toward third-party sellers for these types of models rather than buying from Tesla directly. Third parties might be able to offer the additional coverage that Tesla has slashed, or at the very least, sell the used EVs at a lower price. Either way, this is the second interesting and less customer-friendly change by Tesla in less than a week. While the company continues to grow, it will hopefully remember that giving its customers freedom and benefits is what helped Tesla achieve the global status it has today.
Source: Electrek