Tesla unveils worlds best service and warranty program for Model S, X

On Friday, Tesla Motors CEO announced new policies at Tesla meant to create the "World’s Best Service and Warranty Program". So far the company has focused on straightening out the manufacturing and supply chain issues. Now Tesla can turn to the next major piece: service and warranties.

The goal of the new policies are, according to Elon Musk, to give customers peace of mind and to implement the best possible service and warranty program you'd want from an automaker. Well, the best that they can envision and still afford to offer.

During the conference call in which this was announced, Musk was asked several times if Tesla's existing service program was weak, or if there were any specific problems with the Model S. In other words, was Tesla pushed into making these changes in response to something? Musk responded each time, no this is not driven by a "tactical issue" but by the desire to offer a great service experience. Musk pointed to studies and data saying that service quality can make or break future sales. If service is bad, the customer is unlikely to return to buy more cars from the same vendor, while great service brings customers back.

There are four pillars to the new service/warranty plan:

Unconditional battery pack warranty: Musk presented this item last, but it is the most significant of them. Most electric carmakers have put limitations on the battery warranty, leaving customers with doubt about future costs for replacing battery packs and whether battery pack capacity loss etc is covered by the warranty.

Under Tesla's policy, the battery pack coverage is unconditional, for 8 years. Well, unconditional so long as the car owner doesn't do something deliberate like take a blow torch to it, blow it up, set it on fire, etc.

The goal is to give customers peace of mind, because there is a lot of doubt about battery pack longevity. The customer is not expected to have read the owners manual, because according to Musk if a product requires the customer to read the manual then the product is broken. In other words, the assertion is that electric cars should protect themselves against customer mistakes.

If the customer does something wrong and the battery pack goes bad, Tesla's stance is that it's their fault, and it will be covered under warranty.

The battery pack warranty is for 8 years.

Top-of-the-line 85 killowatt-hour Model S's as loaner cars during service: Where other automakers are offering gasoline powered cars as loaners during service, Tesla will supply a top of the line Model S instead. That means the customer will almost certainly have a better car during service than the one they own. They even will have the option of borrowing a Tesla Roadster during service periods.

The loaner program also includes the option to buy the loaner car. The idea is that once the customer has experienced the ultimate of what Tesla has to offer, that perhaps they'd like to trade up. The loaner car price will be discounted based on its age and number of miles on the speedometer, and additionally the trade-in car value will be discounted in a similar way.

There will be 100ish Model S's in the loaner program, and the goal is for them to be at most 2 months old. This means over the long run a supply of refurbished Model S's will become available at discounted prices.

Seamless valet service in delivering loaner car: The goal is to make service "invisible or better than invisible." It means that the Tesla service department will bring the loaner car to the customer, seamlessly swapping it for their car without any bother. When it's time to return the car, they'll perform the reverse operation, seamlessly swapping back the customers car for the loaner car.

$600 per year service plan now optional: Because electric cars so rarely require service, Tesla is comfortable with making the annual checkup an optional item. The warranty will still be valid even if the car is not brought in for a checkup.

Tesla still encourages owners to bring the car in for annual checkups, because they do more than address problems. They also perform hardware upgrades and make the car batter than it was before.

The service and warranty policies will extend to the Model X when it comes out. However, in the 3rd generation Tesla that's due in 2017, the company may not be able to offer the full program and still keep that car affordable.