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$12K Battery replacement option

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malcolm

Active Member
Nov 12, 2006
3,072
1,760
$12,000

With this in mind we have created a battery replacement program that allows a customer to pay up front and in return receive both a significant discount and certainty about the cost. The price of this replacement is $12,000 and is available to all Tesla customers, including those that have already taken delivery of their car.
Tesla Customer update…. The Jason Calacanis Weblog

How far "up front"?

"certainty about the cost" That's a lock-in then, is it?
 
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After the slippery move that Tesla is doing to buyers now, they better get that 12K battery contract in writing.

I don't see how they can promise a replacement battery in 5 to 7 years. There is no way to estimate what type of battery technology will even be feasible that far out.

The most Tesla Motors could promise in writing is a battery the same or better on replacement.

The bigger issue is what happens to the $12,000 if Tesla Motors is not around in 5 to 7 years. Is the money in escrow? Or is used up keep the company running? I suspect it is NOT in escrow.
 
The bigger issue is what happens to the $12,000 if Tesla Motors is not around in 5 to 7 years. Is the money in escrow? Or is used up keep the company running? I suspect it is NOT in escrow.

Yeah, I remember reading that the down payment money people put on the car was never set aside but spent with all other investor money.
 
I didn't buy it. My reasoning at the time was that I wasn't sufficiently confident in Tesla still existing as a company in 7 years. I'd worry about that less now than I did back in Spring '09, but I still wouldn't buy the replacement option. It seems like advances in battery technology are coming fast enough that the price of a battery that's equivalent to that in the current Roadster will be less than the cost of the option plus the interest you're losing by not investing the money for 7 years.

On a related subject, I didn't buy the extended warranty for the same reason. Knowing what I do now, I think I probably would buy it. I've had a number of minor issues with my Roadster (failed washer pump, washer hose kinked, failed GPS antenna, TMPS needing to be reset several times) as well as a failed PEM that stopped it from moving. I wonder if there will be more of this stuff as the car goes from being young to more middle-aged, and the extended warranty would give me some peace of mind. In fact, if Tesla would offer me the option to buy it now before the original warranty ended, I'd snap it up.
 
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I also did not get the battery option. But you can be pretty sure that in 7 yrs when new batteries are offered for replacement, they will not be selling them less than the current contract price of $12,000. I also believe those who do buy that option will get the latest technology available at the time (possibly higher capacity, lighter weight, etc.).

The reason I didn't buy it was I do expect prices to come down (barring runaway inflation) and am betting in 7 yrs the price won't be much higher than 12,000-20,000.
 
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I didn't get it. In addition to Bolosky's arguments, after they cranked up the price for 400 owners who put up early money for a unproven company and had already locked in their options and pricing, there's no way I would trust them to deliver on a nebulous battery replacement contract.
 
I'm trying to decide about the warranty (I think I still have time since my car doesn't come until Monday) but I probably won't get the battery pack option either. You could probably set aside $100 a month for 7 years ($8,400) and invest it and maybe come close to $12,000. Of course the batter pack could cost more than that in 7 years which is what you're counting on if you buy the option but there's always the chance you may sell the car before then or that the battery could cost less than $12,000.

Anyone think the extended warranty is worth it?
 
I think it's worth it as a kind of reasonable "insurance policy" (in round terms 10% over the price of the car). Just like a long term option contract on a stock. Who knows where the price of your stock will be in 7 years; of course stocks have (generally) the opposite trend ( up? :) ). I wish Nissan would offer similar (10%) terms for the LEAF.
 
@tomsax: What was the first price they said it would cost? I agree with you, that's not a positive behavior.

To be clear, it was the price for the car and options that got raised at the same time the replacement battery option was announced. Somehow the irony of saying "we're not going to honor our previous agreements and here's an opportunity to give us $12,000 now for something we say we'll deliver in seven years" was lost on Tesla management.

I told the story when it all started in my blog from January, 2009, with discussion in the TMC thread Tesla Increases Prices for Existing 2008 Orders.
 
A Tesla salesman told me that a pathetically low number of battery options were sold for the reasons already mentioned above. It sounds like the program was not initially successful because of the enterprise risk associated with Tesla itself, but it still does not sell well even though the company has a stronger balance sheet.
 
I didn't go for it either. I figured that the battery cost will come down somewhat by the time I want to replace it, which I hope will be at the longer end of the range. There are probably better places to put my money in the meantime... such as a Model S reservation!
 
I drove more than 150 miles on a charge only a handful of times in the last year.
If the Roadster had accomodated my whole family ( 3 of us ), it would have been many more.
In around 2-3 years I hope to have an EV with 200+ mile range that fits my whole family, and then it will be used for all of our long trips.
The Roadster will be my commute car, weekend playtoy, and probably not go much further than Portland.

If by 2016 I have a 7 year old Roadster with 160 mile max range and a 4 year old Model S with a 200 mile max range, diminished max range of my Model S will be a bigger concern to me.
I may be pining to upgrade to the 300 mile pack in the Model S before I upgrade the Roadster, because I want to use the Model S for family vacations all along the west coast.

I anticipate that my decision to replace the Roadster battery will be mostly about getting better performance ( lighter pack with same/more power ) and only marginally about replacing the lost range. If the loss in range yields a similar loss in performance and I get back into serious autocrossing, that will be important as well, but I will be loathe to replace the battery with one that is the same as the original. I have my heart set on an improved battery pack. The sooner one is available, the more the decision will nag on me. But even if the range of my Roadster fell to 100 miles, it would satisfy all my commuting and weekend playtoy needs.

All of those reasons led me to not pay for the battery replacement now.
 
I haven't even decided whether I want the 300 mile pack or the 230 mile pack yet.
I am anticipating a huge price premium for that extra 70 miles. I am super excited to just know the pricing for the 3 battery options.
Here is a baseless guess for illustration:
The 160 mile pack: $9000, the 230 mile pack: $14000, the 300 mile pack: $22000
I will make a bunch of spreadsheets and min/max the crap out of it. The value of those extra 70 miles entirely depends on the availability of level 3 charging on the path to where I want to go ( however if there was a destination that was 231-299 miles from home that I wanted to drive a significant number of times that would tilt the calculation dramatically - regardless of the charging. )
Its quite possible I will start with the 230 mile pack but will want to upgrade to the 300 before 7 years are up.

In order to make money on the deal Tesla needs to guess the price the battery you want will be in 7 years and the time value of money and blah blah.
To entice me they will have to build into any deal some way to let me apply the money to whatever battery I want.
If I start with the 230 mile battery, and give them X dollars for my anticipated replacement in 7 years, but I decide I want to upgrade to the 300 battery instead, I will want to apply the money to that instead. If I give them $5000 for my 7 year away 230 mile battery - but after 3 years I want to apply it to the 300 mile battery that costs $10000 at that time, how much more will I have to pay? Will they only discount it $5000 giving me no appreciation on my money? That sucks for me.
If after 5 years, my 230 mile battery is down to 200 miles, but I really need a minimum of 210+ to optimize a common route, and I want to upgrade early what happens?

Since they have better information than me ( about what the batteries will cost 7 years down the road ), and I think they are pretty smart, I am pretty sure they will structure the deal so that it is good for them no matter what I choose.
I would have to see a bunch of very detailed formulas to let me explore all those scenarios.
If I can't convince myself that they are giving away some advantage in every scenario I care about just to lock me in, I won't do it.

So right now, I would say the chances are very slim that I would go for any kind of future battery deal on the model S.
 
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