Jump to content
  • William Maley
    William Maley

    Analysis Reveals Tesla Spends More On Warranty Costs than Daimler or General Motors

      How much Tesla spends on warranty work is shocking to say the least

    Despite the hoopla and endless praise for Tesla and their vehicles, there are a number of owners who aren't happy with the company. Go on to any Tesla forum and you're bound to fin endless posts from owners of the Model X listing issues from poor paint quality to doors not closing. The Model S is no stranger to problems with batteries failing and the infotainment system freezing.


    This is a big issue for Tesla as they have been burning cash for the past two years, with a good amount of this cash coming going to repairs and warranty costs. CEO Elon Musk has promised investors to slow down the burn and curtail costs retaining to repairs. With Tesla announcing their results later today, we'll see if that promise was kept.


    But how much is Tesla spending when it comes to repairs? Reuters did some analysis on Tesla's recent annual report by looking at the total vehicles sold and total spending from warranty repairs and accruals - money set aside for future warranty work. Their analysis showed Tesla spent $1,043 per vehicle on repairs and set aside $2,036 per vehicle for future warranty work. The good news is these numbers are 17 and 34 percent lower than 2014. But compared to the likes of General Motors, Ford, and Daimler, Tesla's numbers are quite high.

    • General Motors: $400 per vehicle on repairs, $332 for future work
    • Ford: $429 per vehicle on repairs, $308 for future work
    • Daimler: $970 per vehicle on repairs, $1,294 for future work

    It should be noted that Tesla only sold 50,000 vehicles last year, while GM, Ford, and Diamler sold millions. Nevertheless, spending just over $150 million of the total $700 million burnt for repair work isn't a good sign.


    Telsa in a statement to Reuters said it has reduced the cost of repair claims in the first year along with the amount it reserves for future repairs.


    Source: Reuters

    User Feedback

    Recommended Comments

    Pretty sure salaries are not being reflected in warranty/repair costs, DD. Otherwise, GM, Ford et al, would be MUCH MUCH higher with their employee count.


    warranty work Hours get billed back to warranty cost centers at HQ.  


    A GM tech being paid for non-warranty work is being paid by the dealership who charges the customer and takes a markup.


    A GM tech being paid for warranty work is being paid by the dealership who bills a specific number of work hours back to GM.


    Legacy Dealerships don't make much profit on warranty work.

    Link to comment
    Share on other sites

    Tesla still has 400,000 orders for the Model 3.  People are thirsty for a Tesla, the demand is off the charts high for them.  The company however at some point has to turn those sales into a profit.  They can't survive forever without making a profit.

    Link to comment
    Share on other sites

    moment of truth is coming nigh for Tesla.  If they were smart, they would either fix the Model X's complexity (ditch the doors) or add a model 3 crossover.


    You can't build cars with subpar quality for too long before it comes back to hurt you.


    if they go belly up, i would not want a furrin company to swoop in and buy the scraps at pennies on the dollar.  If anything, some Chinese company would buy it up and turn it into just a design center, and fund them so they could make the cars in China.  A better scenario is Ford or GM buys them, strips the meat off the bone, and throws away the scraps.

    • Upvote 1
    Link to comment
    Share on other sites

    Well, that may well explain THIS story:

    "Having only recently begun production on its first CUV, the Model X, and with the launch of its first 'mainstream' model, the Model 3, just around the corner, it's an incredibly important time for Tesla. While it's never good for a company to lose several import executives, now is an even worse time for Tesla to be losing them. And yet two manufacturing executives, including the global head of production, just announced they're leaving."

    More at the link:


    Link to comment
    Share on other sites

    Well, that may well explain THIS story:

    "Having only recently begun production on its first CUV, the Model X, and with the launch of its first 'mainstream' model, the Model 3, just around the corner, it's an incredibly important time for Tesla. While it's never good for a company to lose several import executives, now is an even worse time for Tesla to be losing them. And yet two manufacturing executives, including the global head of production, just announced they're leaving."

    More at the link:


    saw that, wonder if that's an indicator of the whole thing blowing apart at the seams

    Link to comment
    Share on other sites

    The free market is the ultimate factor that should determine such things.

    As with much that I write, there seems to be this impression that I have a hate-on for Tesla and Musk. Not so-I applaud the leaps in electric car tech that he helped facilitate. But from the beginning, his hubris and financing models were suspect.

    • Upvote 1
    Link to comment
    Share on other sites

    The free market is the ultimate factor that should determine such things.


    Tesla stock is up $10 in after hours trading.  Ford fell after announcing big profits. So much for the market... eh?


    Musk has the bucks, he can put more money in if he needs to. 

    Link to comment
    Share on other sites

    Random thing - ...I was watching Tesla stock when it was hovering at like $30-35 per share. This was after the IPO, but before their infamous DOE loan repayment.


    They were doing crazy things even back then in 2010. But I thought for a moment. They want to pay off their DOE loans quickly, I thought. So predictably, they had their IPO, but something in their prospectus must have really riled potential investors at the time. I was ornering people (and I was to say the least, not nearly sophisticated with the finances, being really just a kid) to buy Tesla stock. Everyone I could, buy it now, I think they're gonna do something to shock potential investors.


    Now the stock was priced at $17 per share in the initial offering. They raised a rather mundane but not insignificant $228 million dollars. 


    But the way they paid off their loans in one lump sum, and then how they rocked the world with the Model S....their share price started to skyrocket. It was a firmly held belief at the time that the company had a winning product, and I think there may have been some overly high optimism, largely because no one had a recent example of how the consolidation in the industry, between the OEMs, the integration with suppliers has made it so difficult to become a mainstream, blue-chip automaker.


    I think Tesla as a name is too valuable. I can easily imagine if Tesla goes belly up there's going to be plenty of scavengers wanting an excellent deal. Though I wonder what kind of leverage anyone has on Tesla.


    The company has already made the majority of its IP public. It has nothing to lose by toughing it out. It's largest equity holder is the highest executive, and he continues to take the heat from not only the industry, but every time there are more offerings of ownership, he takes a big hit, and then put his own money on the line to repurchase shares at absurd prices.

    Link to comment
    Share on other sites

    The free market is the ultimate factor that should determine such things.


    Tesla stock is up $10 in after hours trading.  Ford fell after announcing big profits. So much for the market... eh?


    Musk has the bucks, he can put more money in if he needs to.

    Bre-X stock was once an investor darling as well. Google how THAT ended up. As Mark Twain once wrote, history doesn't repeat itself-but it rhymes.

    Link to comment
    Share on other sites

    Join the conversation

    You can post now and register later. If you have an account, sign in now to post with your account.
    Note: Your post will require moderator approval before it will be visible.

    Add a comment...

    ×   Pasted as rich text.   Paste as plain text instead

      Only 75 emoji are allowed.

    ×   Your link has been automatically embedded.   Display as a link instead

    ×   Your previous content has been restored.   Clear editor

    ×   You cannot paste images directly. Upload or insert images from URL.

  • Similar Content

    • By David
      Love this new marketing from GM!
      Are you willing to join the future? Are you willing to join Generation E?
    • By David
      GM announced today their new family of EV motors, The Ultium Drive family.

      The Ultium Drive family is made up of five interchangeable drive units and three motors. This will help transition the current portfolio of auto's to fully electric lineup. Performance, scale, speed to market and manufacturing efficiencies will provide GM significant advantages over past EV auto's. GM is leading the way with industry class leading drive units that use an electric motor and single-speed transmissions to apply power best in class horsepower and torque. Ultium Drives will be more responsive than internal combustion motors with precision torque control of the motors and smooth performance. The design and development of the Ultium Drive modular architecture allows us to offer industry-leading torque with power density across a wide spectrum of different vehicles types.
      GM has applied their 25 years of EV experience in creating the Ultium Drive family with lighter and more efficient designs. The Ultium Drive family integrates the power electronics into the drive units assemblies allowing for a 50% reduction in electronics over previous auto's thus saving cost and packaging space while increasing capability by 25 percent.

      To Quote GM press release:
      “As with other propulsion systems that are complex, capital intensive and contain a great deal of intellectual property, we’re always better off making them ourselves,” said Adam Kwiatkowski, GM executive chief engineer, Global Electrical Propulsion. “GM’s full lineup of EVs should benefit from the simultaneous engineering of Ultium Drive. Our commitment to increased vertical integration is expected to bring additional cost efficiency to the performance equation.”

    • By David
      Detroit Free Press covered the annual GM Analysts call this week and with the second quarter results it showed that GM has lost $800 million in the quarter but over all North American Earnings were breakeven and this was with 8 weeks of shutdown. Over all the Stock beat wall streets estimates and yet still sold off in large numbers during the pandemic closure.
      Analysts had plenty of questions for GM with a major question of will GM consider spinning off their technology arm which would include electric vehicles operations into a stand alone company?
      The idea of a stand alone GM Tech company is to recognize the advanced tech GM has over other auto companies and to unlock what Analysts see as considerable shareholder value. This new entity would allow access to cheap new capital to keep the old GM going till the new GM would replace it as a cutting edge tech auto company with what is seen as future strong growth.
      GM has reinforced it's future of all electric auto's, self driving auto's and what it expects to become a zero emission company with 20 new EV auto's on the market by 2023, the first being out in Q1 of 2021.
      The group of Analysts has suggested the new company be called Ultium based on GM's new battery tech.
      The CEO responded that GM is evaluating many scenarios for the future of GM. She had nothing further to say other than the board and executive team will consider all options for what is best for driving long-term shareholder value. Quote: "Nothing is off the table."
      Analysts have since added notes to their research suggesting that GM could already be considering this since so many start ups are valued more than GM such as Tesla, Nikola, Rivian, etc. The Billions of cheap dollars that could help drive GM long term into the future is hard to ignore.
      Some analysts say that to split the company would kill off the baby, meaning the EV side would die after the money was harvested from the stock sale as you only have the Chevrolet Bolt and the new company would have to follow Tesla in going back to the market for more and more money. This is based on what some analysts see as only a US/Canada interest in EVs compared to the rest of the world needing ICE.
      That being said it does show a clear line between those Analysts that see Europe and China leading in new tech with a change to EV's versus those Analysts that are more inline with the oil industry and imply that there is little to no interest in EV's.
      End result is WHAT WILL GM DO?
      I suspect GM will stay the course of using ICE auto's to fund the change to an all EV world. 50 years from now, people will be wondering why it took so long to dump ICE auto's in favor of EV's.
      What are your thoughts on this?
    • By David
      Today July 31st 2020 GM and EVgo anounced their partnership to grow the EVgo fast charging network in growing nationally fast chargers. 2,700 fast chargers will be paid for and added to the EVgo network of fast chargers nationally by 2025.
      EVgo currently has 800 fast chargers that allows EV's to fully charge battery packs from 15 to 30 mins. In support of GM's drive to be 100% renewable power, all EVgo chargers use renewable energy now and will continue for the additional 2,700 stations that are to be added to the network.
      To Quote the News Release:
      This EV charging announcement continues GM’s commitment to an all-electric future.
      The heart of GM’s strategy is a modular propulsion system and a highly flexible global EV platform powered by proprietary Ultium batteries, allowing the company to compete for nearly every customer in the market today, whether they are looking for affordable transportation, a luxury experience, work trucks or a high-performance machine. On Thursday, Aug. 6, 2020, Cadillac will reveal the luxury brand’s first fully electric vehicle, the Cadillac LYRIQ. Earlier this year, GM announced that the Detroit-Hamtramck assembly plant will be GM’s first plant that is 100 percent devoted to electric vehicles and in fall 2021, will start building the new GMC HUMMER EV. GM was the first automaker to launch a long-range, affordable EV in 2017 with the Chevrolet Bolt EV and will expand on the Bolt EV’s foundation with the introduction of the Bolt EUV in 2021.  In March 2020, GM announced plans to greatly expand employee workplace charging with the addition of 3,500 new plugs at GM facilities in the U.S. and Canada. In 2019, GM announced the creation of Ultium Cells LLC, a joint venture with LG Chem to mass-produce battery cells in Ohio for future battery-electric vehicles, and that GM is working with Qmerit to create a more accessible at-home charging solution. 1 Actual charge times will vary based on battery condition, output of charger, vehicle settings and outside temperature.
    • By William Maley
      IHS Markit recently published their analysis on how long Americans are holding onto their vehicles. The average according to the firm stands at 11.9 years, the highest amount since they have been tracking this. Also, about one in four vehicles is over sixteen years old. We should note that this data came before COVID-19 started to wreak havoc on the U.S. IHS notes that new cars only made up 6.1 percent of vehicles in operation in 2019, down 0.8 percent when compared to high of 2016. This highlights falling new car sales.
      But the question lingering over automakers and analysts is will the pandemic cause sales to fall even further as more people hang on to their vehicles.
      "People are going to keep their vehicles because they don't know if they're going to be driving to work in the future, they don't know if they're going to be driving to work anytime soon even. If you're not accumulating the miles, you might keep that vehicle on the road a little longer," said Todd Campau, associate director of aftermarket solutions at IHS Markit.
      IHS estimates that new cars in operation could drop to 5% or less in the coming year or so. The firm also expects the age to climb upward in the coming years as owners consider whether or not to spend the hefty amount on a car, when their current vehicle is still quite good.
      Source: Automotive News (Subscription Required), CNBC

      View full article
  • Posts

    • It's an impressive beast.    Visually, I find it quite attractive. BMW bikes just kind of do it for me.  right now....falling off the wagon buying things myself. Setting up a home stereo with decent used components, and negotiating on antoher large heavy woodworking tool I have no bisness owning. 
    • Only have ridden it 3 times so far because of the weather here, but I'm getting more comfortable with it. The clutch is heavy, I'm going to need to do hand exercises or just ride it a heck of a lot more to work up the muscles in my left hand.  I brought it to work this morning so I can drop it off for state inspection. Thinking back, this is the biggest bike I think I've ridden, maybe not the heaviest, but certainly the largest engine and most powerful.  It's a lot of bike and I'm still getting used to it. One of the nicest things that makes me glad I bought it is that once I'm rolling, it doesn't really matter what gear I'm in, I can just roll on the throttle and go without having to downshift. Love the torque.
    • The only reason ICE vehicles considerably increased in costs is because now active safety systems became standard.  That alone increased costs of all vehicles by at least $3-5k.  Before active safety systems came into play the yearly increase in vehicle cost was only few hundreds at most to compensate for the inflation. The price disparity between comparable  ICE and BE vehicle is still significant and so far doesn't seem to decrease.  It might change in the future, but as of right now it is a valid argument.  It is a dead horse argument already but so is getting daily bombarded about other side of the argument which you seems to ignore.  
  • Social Stream

  • Today's Birthdays

    1. F&K
      (57 years old)
  • Who's Online (See full list)

  • My Clubs

About us

CheersandGears.com - Founded 2001

We ♥ Cars

Get in touch

Follow us

Recent tweets


  • Create New...