Tesla’s 8-Year Model S Warranty Will Crimp Company Profit

[unhappycamper]

http://www.bloomberg.com/news/2014-08-16/tesla-s-8-year-model-s-warranty-will-crimp-company-profit.html

Tesla’s 8-Year Model S Warranty Will Crimp Company Profit
By Alan Ohnsman 2014-08-16T04:01:00Z

Tesla Motors Inc. (TSLA) is expanding the warranty for its electric Model S sedan by offering unlimited mileage for the drive unit and battery pack for eight years to ease reliability concerns, a move that will crimp profit.

The “drive-unit warranty has been increased to match that of the battery pack,” Elon Musk, Tesla’s chief executive officer and co-founder, said yesterday on the company’s website. “There is also no limit on the number of owners during the warranty period.”

The changes in coverage for the Model S, which affect both new and existing customers, will have a “moderately negative effect” on earnings in the short term, said Musk, who is also Tesla’s biggest shareholder. The company is making the change to reinforce its belief that electric motors are more reliable than gasoline engines, he said.

The announcement comes after Tesla’s flagship vehicle, ranked as the best-reviewed car of the year by Consumer Reports in February, exhibited flaws following continued use, according to the magazine. In July, automotive data and pricing company Edmunds also reported glitches with its Model S after more than a year of heavy driving. The entire vehicle, including drivetrain, previously had a warranty for four years, or 50,000 miles (80,450 kilometers).

[Demeter]

1. Well, for $71k, a buyer expects SOMETHING of a lifetime use

[pipoman]

2. Using the Detroit model of

Planned and implanted mechanical failure, maybe it will cripple. Using a model of immediate response to arising mechanical issues may not be devastating at all ..