Life with Tesla Model S: beware Extended Service Agreement fine print Page 2


2013 Tesla Model S, in July 2017 [photo: David Noland]

2013 Tesla Model S, in July 2017 [photo: David Noland]

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So, my bad: I should have read the contract.

But these were people who had treated me extremely well for a very long time, dating back the old days at the now-defunct service center in White Plains, New York. I assumed they would tell me everything I needed to know.

I assumed wrong.

GO WAY BACK: My 2013 Tesla Model S Electric Sport Sedan: Delivery at Last! (Feb 2013)

Did they know?

I don’t think the Tesla service folks intentionally misled me about  the ESA refund rules. It’s more likely they didn’t know about The Catch, either.

As an early production model that got driven a lot, my Model S was one of the very first to hit 50,000 miles and start the clock on an ESA. Back then, the whole ESA business was pretty new to everybody. 

Solar panels at Supercharger in Barstow, CA, during Tesla Model S road trip [photo: David Noland]

Solar panels at Supercharger in Barstow, CA, during Tesla Model S road trip [photo: David Noland]

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Many Tesla people still don’t know about The Catch.

My delivery guy for the 100D—the guy who delivered the bad news—was surprised to hear about it. So was the Tesla tech support specialist I talked to on the phone last week.

Standard practice?

The ESA Refund Catch, it turns out,  is standard industry practice, according to people I talked to at a local Mercedes dealer: their ESA refund policy has similar language.

“But we’re very careful to fully disclose it beforehand,” the dealer rep told me.

At the very least, Tesla needs to redouble its efforts to inform potential ESA buyers about The Catch.

Most of us don’t read all the fine print, and we rely on Tesla people to give us the whole truth. In my case, they failed to do that. (Again, the final responsibility was mine. Shoulda read the contract.)

Tesla Model S charging at RV Park in Biloxi, MS, during electric-car road trip [photo: David Noland]

Tesla Model S charging at RV Park in Biloxi, MS, during electric-car road trip [photo: David Noland]

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No insurance policy catch

Industry standard or no, I think The Catch is bad policy. Would a car insurance company try to pull  a trick like that?  (Face it: an ESA is essentially an insurance pollcy, right down to the deductible.)

At the same time I cancelled my old Tesla’s ESA, I also cancelled its insurance policy.

Under precisely the same circumstances—a policy cancelled part-way through, with claims exceeding the policy premium—Geico simply credited my account with a full pro-rated refund.

Never mind the minor accident I’d had, which ended up costing them more than the policy premium. No Catch. That’s the standard in the car insurance industry.

I doubt state insurance regulators would let them do it any other way.

Tesla Model S at Supercharger site in Ventura, CA, with just one slot open [photo: David Noland]

Tesla Model S at Supercharger site in Ventura, CA, with just one slot open [photo: David Noland]

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Bottom line

In the end, I suppose my entire Tesla ESA experience was a wash. 

Over the two-years and 26,000 miles, I paid $4,600 ($4,000 for the ESA, plus $200 deductibles for each of three service visits) and got $4,600 worth of repairs done.

But from my point of view, I only got two years worth of repairs covered, not the four years I presumed I was getting.

Ironically, Tesla’s ESA refund policy is an incentive for potential trade-in customers to hold on to their old cars until the end of the ESA term. 

For Tesla, that means no profit on a new-car sale, and two years’ additional exposure to warranty repair bills.

If I had known about The Catch before making my trade-in decision, the calculus would have changed significantly. 

Tesla Model S electric-car road trip, Route 66 Museum, Elk City, Oklahoma [photo: David Noland]

Tesla Model S electric-car road trip, Route 66 Museum, Elk City, Oklahoma [photo: David Noland]

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My total transaction price would have gone up by $2,000, and I could have held on to my old car for a couple of more years with full repair warranty coverage at no extra cost. 

Would I have made the trade, if I’d known about The Catch? Would I have even bought the ESA in the first place, if I’d known about The Catch?

Maybe. Maybe not. Hard to say, in retrospect.

But one thing’s for sure: Tesla needs to make sure its ESA customers are made fully aware of The Catch and all its implications.

 Hopefully, my screw-up will be a lesson learned for future Tesla ESA buyers.

You’re welcome.

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