Extended warranties are insurance providing protection against paying for expensive repairs beyond the cost of the policy.
Assuming Tesla really is managing service as a break-even program, then the warranty cost is the average of what an owner would likely pay for repairs during the warranty period.
There are a few major components (not including the motor and battery which are covered separately by Tesla) - such as the console display, MCU, AP processor, charging system, …
Tesla is charging $200 per incident for repairs under the extended warranty.
Tesla is also including Roadside Assistance with the extended warranty - which provides towing for your vehicle to the nearest service center, which can be useful if you break down during a road trip (which happened to us in the middle of Kansas).
We've owned 3 Tesla vehicles - the first was kept until almost 100K miles - and have purchased the 4 year extended warranty for all 3 vehicles. While that increases the upfront cost of the vehicles - it also protects us from higher than expected repairs over the 8 years or 100K miles we plan to keep the vehicles.