Tesla Silently Changed Its Service Plan Policy and Eliminate Transfer of Extended Warranty

By Staff Writer

Feb 14, 2016 11:23 PM EST

In a plan to boost its car sales, Tesla changed after sales service policy by increasing the price of the service. The company also prevent owners of Tesla's vehicle to transfer their extended warranty when reselling their cars.

The Verge reported that the change that affect Tesla's car owners the most is elimination of extended warranty transfer. With the new policy, Tesla owners can cancel their extended warranty and service plan, then receiving pro-rated reimbursement when selling the car, but they are not able to transfer the warranty to the new owner.

Prior to the new policy, Tesla charges $100 for warranty and service plans transfer to new owner.

Tesla also changed its service plan policy for both Model S and Model X and the new model to come. Tesla increase the service plan policy from $1,900 to $2,100 for four years plan, and $3,800 to $4,000 for 8 years plan. The Palo Alto-based company also remove wheel alignment service from its included annual maintenance service.

This policy will impact the resale value of Tesla in the future. It is because Tesla's owners will not be able to include a multiyear factory warranty when selling their cars after 4 years or 50,000 miles of ownership.

An automotive industry analyst for Kelley Blue Book Karl Brauer commented, "Tesla has an affluent customer base, and these buyers rarely keep a car longer than 4 years or 50,000 miles." He also noted the warranty transfer removal as, "By eliminating the warranty transfer option Tesla has largely neutralized the benefits of its extended warranty coverage. It lets Tesla technically offer longer vehicle coverage while exposing the automaker to minimal real-world cost increases... Bottom line, if you can't transfer the warranty, your options as a buyer are reduced."

As for the new model, Tesla announced to be ready taking pre-orders on its Model 3 next month. The car will be sold at $35,000 excluded the federal and state tax incentives. Tesla's spokeswoman Khobi Brooklyn told Bloomberg, "We can confirm it's $35,000 before incentives. We haven't changed our minds."

The price tag for Model 3 at $35,000 was announced last year by CEO Elon Musk. The tax incentives will reduce $1,000 of the price, and it will increase the market share as the company aimed to get in the profit lane that after years of loss. This significant tax incentives in some states will make cost of Tesla to be at the same as Honda Accord or Toyota Camry, according to United Press International.

Tesla will aim to increase its market share fast in this year. Tesla also increased the price of after sales service and eliminating the transfer of extended warranty. However, the policy may affect sales in the long term.

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