We're not sure what you're paying for.
Tesla has introduced a new Extended Service Agreement (ESA), which owners can buy directly from the app. The ESA is only available for vehicles that are still covered by the basic warranty an owner receives when purchasing the vehicle. In Tesla's case, there is a four-year/50,000 basic warranty, though earlier model years came with a more substantial eight-year/125,000 or eight-year/150,000 basic warranty. It's important to remember that the battery and power unit warranty is not relevant to the ESA at all.
According to Tesla, the models that qualify are the 2012-2020 Model S and 2015-2020 Model X. All Model Y and Model 3 EVs are included. If you've gone over the 50,000 miles, the car no longer qualifies
CarBuzz found the complete eight-page service agreement on Tesla's website to see if it's worth investing in.
First, the cost and length. All models are covered by the same two-year/25,000-mile service agreement. The purchase price is $3,100 for the Model S, $3,500 for the Model X, $1,800 for the Model 3, and $2,000 for the Model Y. Because the ESA is sold via the app, it will show you how many years and miles you have left to make the purchase.
The ESA claims to cover the car in the event of a “failure”, though failure is an extremely limited definition according to the document Tesla owners have to sign. Tesla defines it as the “complete failure or inability of any covered part to perform the function(s) for which it was designed due to defects in material or workmanship of any parts manufactured or supplied by Tesla that occur under normal use.” Normal use is defined in each model's owner's manual, which is also available on the website.
Interested parties might be convinced that the price of the ESA is not that bad compared to the cost of replacing a battery, but the exclusions portion of the document has us wondering why you'd want this. First and foremost, the ESA does not cover the battery or drive unit, corrosion, storage, and freight charges. The vehicle is also not covered if the owner partakes in any kind of racing.
This is fine, considering it's effectively a service agreement, but it also doesn't cover several maintenance items and parts. It doesn't cover the usual wear and tear items, such as brakes and tires. That's on par in the industry. But Tesla also doesn't include diagnostics, wheel alignment, cleaning, suspension alignment, or battery testing, to name just a few. You don't even get roadside assistance.
We're not entirely sure what an owner is paying for, and you have to pay a $100 deductible for each scheduled service.
We read the document twice, trying to make sense of it, and we have nothing. It's also worrying that Tesla has sole discretion to decide whether something is a failure. Perhaps in the case where something is an undeniable failure like a steering wheel coming off, the infotainment freezing, or even an electric seat failing to operate. We can't think of a single item failing that can cost as much as Tesla charges for the ESA.
We did some snooping, and a Tesla's average annual maintenance cost is between $800 to $1,000. Tesla's service network also has a pretty poor reputation. It would be wiser to put the money in a high-interest savings account where you have to give advanced notice to gain access to the funds. And unlike the ESA, a savings account doesn't expire after two years or 25,000 miles.
The folks at Electrek are concerned that this might be used to boost the financials at the end of a quarter, but it's not like Tesla needs the money, considering how well the Tesla Model Y, in particular, is doing.
Keyword: Tesla's New Extended Service Agreement Is Daylight Robbery