Tesla Announces ‘World’s Best’ Service Program

In its continual efforts to do things automotive just a little bit differently – or very different – Tesla Motors announced today an optional new service loaner policy to enhance “peace of mind” for owners of its Model S.

Should Model S customers need servicing for any issue, the $600 per year package entitles them to have as close to an “invisible” service experience as possible, Tesla says.

The company will valet a premo Model S or Roadster – to customers – regardless what level and options of Model S they may have.

Saying that “the world’s best” cars ought to get “the world’s best service and warranty program,” CEO Elon Musk laid out points regarding the plan.

The company is building a small fleet of 85-kwh Model S Performance loaners and will also make available in most locations Roadster loaners, and other provisions are included.

And, if while they are at it customers decide they like the Model S loaner better, they can just trade their existing Model S in at a pro-rated difference.

“The loaners will be available for immediate purchase at a price that is lower by 1 percent per month of age and $1 per mile,” said Tesla today in a follow-up blog post. “If you like the service loaner more than your other car, you can just keep it. This ensures that the service fleet is constantly refreshed and gives customers the best optionality.”

As time goes on, Musk said Tesla expects cars it takes in on trade will add to a growing inventory of used Teslas for sale as is the case already for pre-owned Roadsters the company offers.

Of course, if customers merely want to get their existing car back, no problem. The idea is not being portrayed as a means to upsell, in fact Musk said something that flies radically in the face of traditional dealership service models.

“What I’ve told the Tesla Service Division is their job is never to make a profit,” Musk said.

Investors may get “mad” hearing this, Musk said, but the service model he says Tesla is aiming for should be run to the “zero profit point.”

Musk contends service is best if it is painless as possible, and he wants to “minimize not maximize” the cost of any service.

This said, the all-electric cars do not need customary servicing like gas or diesel vehicles, and so, the service policy may not even be used unless a major issue crops up, like with the battery or electronics.

“As such, we are comfortable making the annual checkup entirely optional,” said Tesla. “There is still value to having Tesla look at the car once a year for things like tire alignment, to address a few things here & there and perform any hardware upgrades – our goal is not just to fix things, but to make the car better than it was. However, even if you never bring in the car, your warranty is still valid.”

On the other hand, if the battery or electronics have an issue, Musk said this would be a no-fault thing, and Tesla would not snivel if the owner failed even to have taken minimal steps to become familiarized with the vehicle’s operations and care.

“The intent is to provide complete peace of mind about owning your Model S even if you never read or followed the instructions in the manual,” said Tesla.

Unlike the Roadsters which had a “bricking” problem known to be possible, the Model S is designed to be more fool-proof, so if something goes wrong inside the standard 8-year warranty period, Tesla will cover it, Musk said.

He said Tesla will fix a warranted battery as needed, and if this happens a few years from now, and there happens to be an updated battery available, there may be some leeway in upgrading at that point, it was implied.

Exceptions to the warranty would be such as from collision damage, intentional abuse, or if the battery pack had been opened by non-Tesla personnel.

Musk said the customer-centric program was as close to a dream policy as they could make it. He said he and Tesla designed its provisions putting themselves in customers’ shoes, imagining what they would want in an ideal arrangement if they were the customer.

Showing Itself Smart

While Tesla is bold enough to say its cars are the world’s best, Tesla is never so arrogant as to come out and declare something like “we are smarter,” yet smarter it is potentially showing itself to be.

Is it any wonder auto dealership associations are fighting Tesla’s unorthodox retail store and service center infiltration into their domain, and in cases looking at Tesla like the incarnation of the devil himself?

Talk about upsetting the old way of doing things.

Musk said he tells his service centers not to try and make a profit. He said Tesla is making scant profits selling the cars at this point too.

Of course Tesla is most definitely in business for profit, but how it is aiming to go about achieving this is altogether different.

Traditional dealerships have disparagingly been called “stealerships” by some, and in any case, back-end profits from parts and service are big business to help make up for thin margins perceived from the initial car sale.

Over the years, while many traditional dealerships have made loyal customers who value the relationship, in other cases some dealerships have engendered no love among people who have felt less than valued, if not overcharged or outright burned.

Further, the relationship between salespeople and customer, while typically marked with smiles and surface cordiality, can often behind the scenes be seen as an adversarial affair marked by ambivalence on both sides of the table.

Musk and Tesla are making big efforts to destroy this paradigm.

He said his agenda is not a short-term gain in sales, but long-term loyalty, ostensibly by earning it by maximizing the quality of the service experience.

Reporters today asked Musk what drove him to make the decision – was it knowledge of looming problems he wanted to pre-empt? Was it knowledge of current issues he wanted to head off at the pass?

Surely there have been some issues, but Musk said so far not one battery has failed at the module or cell level, and his goal was planting seeds of long-term buyer trust.

“We want to say ‘just don’t worry about the battery, its going to be fine,’” he told reporters in characterizing the spirit of intent behind Tesla’s motives.

Consumers today are naturally concerned with the expensive battery pack that, being new technology, is due to sooner or later be updated. Jumping into the EV waters does make many people take pause, especially at the $70,000-$110,000-plus prices Tesla is charging for its first sedan.

It would appear Tesla is positioning itself for an above-Mercedes-Benz-level experience, and says it wants to soften the way to the point of being no cause for fear.

Musk said he’d been preoccupied until recently with car design, supply chain, and other issues with launching the Model S, and now has turned his attention to ownership and service issues for Tesla’s growing customer base.

Of course, it all comes at a price, so the program is really like being well insured. It does not guaranty nothing will go wrong, but it is intended to make it as easy as possible should anything need attending to.

Customers who opt in will not need to sit around a dealership listening to air-impact tools ratcheting away in the service bays, with a TV and stale coffee to keep them company.

Instead they get to stay home with a top-line loaner delivered to their door for any reason they need their car looked at.

As for whether this will apply to the Model X and future cars, Musk said Tesla has that as an “aspirational” goal, but would not commit unequivocally that it will.

He said to lower its costs, Tesla may need to bundle out some of the services, but did leave open the possibility the same program could be had in the future for pending models.