Starting a new company is not an easy undertaking. The complexities of running a business in any industry seem to be mount higher and higher each year, what with local, state and country regulations. Then if your product or service expands into other countries, there are even more regulations to contend with as well. This couldn't be even more true for the automotive industry. If anything, it is even tougher for that industry than any other.
New car buyers are usually hesitant to buy an unknown brand of vehicle. After all, it is pretty sizable investment into something that they need everyday without fail. The unknown brand leaves many questions on the table because there is no reputation established yet in regards to dependability and reliability. Thus the unknown makes the task of a new brand almost impossible.
Edmunds, a name well known and respected has been test driving a new brand, the Tesla Model S, an electric car on a long-term basis. Yes, they take the challenge to test drive such things so that the manufacturer has the opportunity to get the “bugs” out before their product hits the market. Risky for Edmunds, but somebody has to do it, right? It is also a risk for any auto manufacturer as Tesla found out right away when they had to replace the test unit 4 times for Edmunds.
So how did Tesla Motors counteract those 4 failures with Edmunds? The Silicon Valley auto maker announced a major upgrade that no other auto maker has dared to attempt, and most likely won't. They have increased the warranty to the Model S drivetrain to equal that of the battery pack. What does that mean? Well the 85-kilowatt-hour Model S now comes with an 8 year warranty on the drive-train and even better, unlimited mileage... or according to Elon Musk, CEO of Tesla Motors, “infinite mileage!”
Starting a new company is not an easy undertaking. The complexities of running a business in any industry seem to be mount higher and higher each year, what with local, state and country regulations. Then if your product or service expands into other countries, there are even more regulations to contend with as well. This couldn't be even more true for the automotive industry. If anything, it is even tougher for that industry than any other. New car buyers are usually hesitant to buy an unknown brand of vehicle. After all, it is pretty sizable investment into something that they need everyday without fail. The unknown brand leaves many questions on the table because there is no reputation established yet in regards to dependability and reliability. Thus the unknown makes the task of a new brand almost impossible.
Edmunds, a name well known and respected has been test driving a new brand, the Tesla Model S, an electric car on a long-term basis. Yes, they take the challenge to test drive such things so that the manufacturer has the opportunity to get the “bugs” out before their product hits the market. Risky for Edmunds, but somebody has to do it, right? It is also a risk for any auto manufacturer as Tesla found out right away when they had to replace the test unit 4 times for Edmunds.
So how did Tesla Motors counteract those 4 failures with Edmunds? The Silicon Valley auto maker announced a major upgrade that no other auto maker has dared to attempt, and most likely won't. They have increased the warranty to the Model S drivetrain to equal that of the battery pack. What does that mean? Well the 85-kilowatt-hour Model S now comes with an 8 year warranty on the drive-train and even better, unlimited mileage... or according to Elon Musk, CEO of Tesla Motors, “infinite mileage!”
To make the risk of buying an unknown even sweeter, the warranty period is not limited by number of owners either. So for those brave new car buyers that took a leap-of-faith leap too soon? No, to build a reputation of a brand that stands behind its product, Tesla offer this new extended warranty to those Model S that are already on the road.
Elon Musk, Tesla's CEO has already warned investors the downside to this extended warranty saying, “... I must acknowledge that this will have a moderately negative effect on Tesla earnings in the short term, as our warranty reserves will necessarily have to increase above current levels. This is amplified by the fact that we are doing so retroactively, not just for new customers.” That can be painful to hear as an investor, but he was quick in pointing out the positive long term effect, which should give any investor confidence they are with a good company by saying “.... However, by doing the right thing for Tesla vehicle owners at this early stage of our company, I am confident that it will work out well in the long term.”
Mr. Musk has said that this should have been the company's policy from the start because the company, Tesla, stands by their beliefs that electric cars are better cars. Why? There are fewer moving parts for starter and thus, a car manufacturer warranty should reflect that.
Some skeptics believe that this unheard of warranty by Tesla is simply a reaction to the drive-train replacements that Edmunds and Motor Trend both have reported. Both had long-term test cars and both experienced problems with the drive-train. For an auto maker, new or experienced, that isn't a good start for any recently released vehicle.
So the company Tesla has gone a little bit further with warranty. Is it to prove to the media that they are wrong in stating that it was almost a knee-jerk reaction to save face? Or is this extension of warranty with the 60-kWh cars now have 8 years or 125,000 miles warranty and the battery-pack warranty is now expanded for any failure under just about any circumstances just another proof that this company stands behind its products?
Yes, the road to starting up a new brand is a bumpy, curvy, unknown road. However, the payoff is yet to be seen. Kudos to Mr. Musk and the Telsa Motors team.
Image Credit: Sam Felder