Tesla Motors announced yesterday that it has extended the warranty coverage on its electric Model S sedan to match that of its battery, meaning that both of the components of the car now have an eight-year, infinite-mile warranty.
The warranty boost will apply retroactively to all Model S cars that have been produced since 2012, the company announced on its blog, and will have a short-term, moderately negative effect on its earnings. The announcement comes shortly after Consumer Reports criticized the Model S for “more than its share of problems,” including a variety of electrical issues. Last year, the magazine gave the Model S top marks for “smoothness, effortless glide and clever, elegant simplicity”.
Tesla CEO Elon Musk has said, in regards to the extended warranty, “in hindsight, this should have been our policy from the beginning of the Model S program”. He added that if the company believes that electric motors are more reliable than gasoline engines that most conventional cars use, “then our warranty policy should reflect that”.
“To investors in Tesla, I must acknowledge that this will have a moderately negative effect on Tesla earnings in the short term, as our warranty reserves will necessarily have to increase above current levels. This is amplified by the fact that we are doing so retroactively, not just for new customers. However, by doing the right thing for Tesla vehicle owners at this early stage of our company, I am confident that it will work out well in the long term,” he said.
Read more about the story at The Wall Street Journal.
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