Tesla Increases Warranty of Model S to 8-Years a Factor That Will Cut Down Company Profit
Tesla Motors Inc. is increasing the period of warranty for its Model S electric sedan and is offering unlimited mileage for the vehicle and battery pack and is increasing it to eight years to relieve concerns of reliability. This move will have negative effects on the company's profit.
The announcement came following some glitches that were seen from the continued use says a magazine. This flagship vehicle of Tesla was ranked as the best-reviewed car of the year by in the month of February by the Consumer Reports.
In July, Edmunds the automotive data and pricing company came up with reports of similar troubles with the Model S when it was used heavily for one year. Previously the whole car, including the drivetrain, had a warranty of four years or 50,000 miles.
Yesterday Elon Musk, the chief executive officer and co-founder, of the company said that the alteration in Model S's coverage will surely affect the new as well as the existing customers. He said that it will have a "moderately negative effect" on the revenues for a short term. Musk is also the biggest shareholder of Tesla. According to him the changes made by the company is aimed towards reinforcing the belief that electric motors are by far more reliable as compared to the engines that run on gasoline.