Tesla ends $100 flat fee service promise
November 2, 2015 - 12:01 am ET
When the sleek, electric Tesla Model S went on sale in 2012, Tesla Motors Inc. promised an unmatched customer experience, even if the car broke down.
It wouldn't be easy. Tesla had 15 service centers worldwide; BMW and Mercedes-Benz had more repair shops in Southern California alone. So Tesla, reluctant to do business with franchised dealers, tried a novel strategy.
If the Model S needed repair, Tesla would dispatch a technician called a Ranger. If the technician could fix the Model S on the spot, he would. If not, the Ranger would deliver the car to one of Tesla's factory-owned service centers. The price: $100.
"We've revised our pricing such that Ranger Service for Model S and Roadster is now a $100 flat fee per visit, regardless of how far away you live from a Tesla Service Center," Joost de Vries, then vice president of global service at Tesla, wrote in a 2012 blog post.
"Our goal is to take care of your car in a way no one has ever done before."
But that was then.
Now, some customers who bought a Model S based on such assurances feel that Tesla has gone back on its word. Sometime earlier this year, Tesla started charging well above $100 to customers who don't live near a service center.
Among them is Brian Manke of Chesapeake, Va., who balked at a $606 quote to have his Model S delivered to Tesla's service center in Raleigh, N.C., 202 miles away, for repairs under warranty.
He doesn't regret his purchase. "It's an awesome car," Manke said, "and it only gets better the more you drive it." Yet he can no longer recommend Tesla with such gusto to neighbors.
"Ever since I got my Model S, I've had a bunch of people ask me: 'What do you do for service?'" Manke said. "I'd say, 'Oh, they pick it up for $100.' It's going to change people's tune a little bit now when I tell them that it's going to be at least $600."
The change to the Ranger program happened quietly earlier this year. One page on Tesla's service website still touts a $100 flat fee. Another says: "Service begins at $100 per visit and increases based on your distance from the nearest Tesla service center."
"Sorry for the confusion," a Tesla service adviser wrote this summer to a customer who inquired about the $100 fee, in an email reviewed by Automotive News. "The flat fee of $100 is no longer valid."
Manke's complaint, shared by other customers on online forums, is a rare blemish on Tesla's otherwise exemplary record for customer service.
"Ever since I got my Model S, I've had a bunch of people ask me: 'What do you do for service?' I'd say, 'Oh, they pick it up for $100.' It's going to change people's tune a little bit now when I tell them that it's going to be at least $600."
Tesla Model S owner
When the magazine Consumer Reports polled Tesla customers in 2014 on their service satisfaction, they gave the company a score of 99 out of 100, with 98 percent of Tesla's owners saying they would buy a Tesla again.
"We take care of our owners unlike any other automaker, with 24-hour service, pickup and delivery and free loaners," Tesla spokeswoman Alexis Georgeson wrote in an email when asked about the change in Ranger policy.
When the Model S went on sale, "we needed to introduce a way for early customers out of range of a service center to have a seamless Tesla ownership experience," she added. "Since then, we have invested heavily in brick-and-mortar locations to serve our rapidly growing customer base."
Most customers were unaffected by Tesla's policy change. As of this September, when Model X deliveries began, Tesla had 125 service centers worldwide, with 91 percent of Tesla owners living within 50 miles of one.
As the company prepares for the launch of the mass-market Model 3 by adding more service centers, Ranger service will become less and less of an issue.
Nevertheless, the end of the $100 promise is a telling episode in the history of Tesla, showing its transition from a scrappy startup to a mass-market automaker concerned about profits and economy of scale. It also serves as a cautionary tale about the challenge of breaking into the auto industry with a factory-owned service network.
'So damn good'
Manke, a manager at a power tools company, doesn't usually buy luxury cars, but he was seduced by the Model S. His wife commutes 80 miles to work, so the couple concluded they'd save enough money on gasoline to afford one.
Before buying the car, Manke called the service center in Raleigh to make sure Tesla would honor its $100 promise. The people there said yes, Manke recalls. He put down a deposit on a Model S. It arrived in April. He was enthralled.
Manke quickly spotted some minor flaws, such as chrome trim around the back door that didn't fit right. And soon the Model S started occasionally generating error messages while charging. When he called the service center, they quoted him $606.
Manke held off on the repairs, waiting until the next time he visits a city with a service center so he can drop off the car himself, free of charge. He said he is disappointed Tesla didn't honor the price that it had advertised.
"I certainly expected it to be that way for the duration of the warranty period," Manke said. "That was a major part of my decision-making process. If it weren't for the fact that this car is so damn good, I'd be pretty ticked off."
Ending the $100 promise could lead to substantial cost savings for Tesla, which has a goal of becoming profitable on a cash-flow basis in early 2016. Ranger service can be extremely expensive, as in the case of Joshua Green of St. John's, Newfoundland.
When shopping for his car, Green asked Tesla what would happen if the car broke down on the remote Canadian island. Tesla told him about the $100 Ranger service, and Green got the promise in writing. But when his Model S broke down on the side of the road this summer, Tesla asked for more than $800 to dispatch a Ranger.
Green pointed to the email correspondence, and Tesla agreed to put his Model S on a ferry and ship it to Montreal for repair, free of charge.
Green said he's glad Tesla ultimately honored its promise, but the company needs a better plan for customers who live far from service centers.
"At the end of the day, we were completely satisfied with how they took care of us," Green said. "When we added it up, they probably spent $10,000 on us. It's incredible that they would do that. But there's no way they could do that for everybody."
In 2012, Tesla set a $100 flat fee for its door-to-door Ranger service. It has ended that, reflecting the evolution of its service operation. Consider these numbers.
15: Tesla service centers worldwide when Model S deliveries began in June 2012
125: Service centers globally when Model X deliveries began in September 2015
90,000: Tesla vehicles on the road worldwide as of September 2015
91%: The share of Tesla vehicles within 50 miles of a service center
83%: The share of Tesla vehicles within 25 miles of a service center
Source: Tesla Motors