Key Takeaways
1. Tesla is now offering a paid option for a longer warranty on high-voltage batteries and drive units for Model 3 and Model Y, extending coverage by two years for $2,000 (CA$2,800).
2. The standard warranty for Tesla’s high-voltage battery is 8 years with a 70% capacity retention, while competitors like Hyundai-Kia provide a 10-year warranty at no extra charge.
3. The extended warranty must be paid upfront and is not available on a subscription basis, differing from earlier reports.
4. The Extended Service Agreement (ESA) for out-of-warranty battery replacements is transferable to new owners, potentially increasing resale value.
5. Tesla’s new warranty options respond to pressure from competitors offering longer warranties, as the market trends towards 15-year warranties with higher capacity retention.
After expanding its coverage on other pricey parts, Tesla is now offering a longer warranty option for high-voltage batteries and drive units in both the US and Canada.
Though it’s not the anticipated 12-year battery warranty for the Model Y, this new choice does provide owners a bit more comfort regarding the costly battery replacements once the warranty period ends.
Competition in the Market
Tesla’s primary competitors in the electric vehicle market within the US and Canada are the Hyundai-Kia group, which provides a 10-year battery warranty. This is especially notable given that their EVs utilize modern 800V powertrains that enable faster charging.
As is typical for Tesla, they’ve managed to create a longer battery warranty for both the Model 3 and Model Y as a paid option, unlike Hyundai and Kia, who offer theirs at no extra charge.
Warranty Details
At present, Tesla provides an 8-year warranty for the high-voltage battery and drive unit, ensuring a 70% retention of capacity during that time.
For those interested in adding two more years of warranty coverage for their Model Y or Model 3, they can pay $2,000 (CA$2,800) for the opportunity, but there’s also a $500 deductible if a battery replacement is needed during the additional 24 months.
Subscription Misunderstandings
Earlier reports hinted that Tesla would roll out an extended warranty for the high-voltage battery on a subscription basis, starting at $100 per month. However, the reality is that Tesla requires payment upfront, regardless of when the battery fails—whether it happens early in the coverage or later, or even if it doesn’t fail at all.
The extended battery warranty for the Model 3 and Model Y will only appear for the vehicle owner in the app before their original factory warranty expires. Luckily, what Tesla refers to as the Extended Service Agreement (ESA) for out-of-warranty battery replacements after the initial eight years is transferable to new owners as well.
Impact on the Used Market
This setup means that a Model Y can be sold in its seventh year of ownership while still having three additional years left on the battery warranty, which could enhance the used EV market. Tesla might be feeling pressure from longer battery warranties offered by competitors in both the US and China, where there’s a movement towards a standardized 15-year EV battery warranty with an 85% capacity retention.
Modern EV battery technologies are capable of supporting these longer warranties as the norm. However, Tesla has calculated that it can charge as much as $2,500 for a replacement or repair at cost. In many situations, Tesla will simply keep the one-time ESA payment since they are well aware that the Model 3 or Model Y battery packs typically last longer than their standard 8-year warranty.
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