Xcelerate to Offer Extended Warranties on Used EVs, Including Tesla Vehicles
【Summary】Texas-based auto finance and leasing company Xcelerate announced it will offer extended warranties for the first time on used EVs, including more pricier Tesla models. The company said it’s the first in the U.S. to provide extended warranty coverage for electric vehicles.
Visit any used car dealer and chances are you won't see many used electric vehicles for sale, especially high-end models from Tesla. Part of the reason for this that Tesla's vehicle warranties are not transferable to second hand owners, so a used Tesla with 50,000 miles is no longer covered by Tesla's extended warranty once sold by the original owner.
Texas-based auto finance and leasing company Xcelerate announced it will offer extended warranties for the first time on used EVs, including more pricier Tesla models. The company said it's the first in the U.S. to provide extended warranty coverage for electric vehicles.
Currently, Tesla does not offer any certified pre-owned models like many major automakers do, including BMW, Mercedes Benz and Ford. Tesla vehicles cannot be leased new either. Buyers looking to save some money by purchasing a used Tesla lose warranty coverage, since the electric automaker's standard warranty is non-transferable.
The warranties offered by Xcelerate will be sold in partnership with Endurance Warranty Services LLC and insurance company AmTrust Financial. Xcelerate already specializes in leasing Tesla vehicles to commercial customers.
These types of optional extended warranties are common in the automotive industry for pre-owned vehicles, and cover expensive components such as a vehicle's engine or transmission, both of which are expensive to replace. On an electric car, replacing some components can much more expensive than on a conventional gas-powered vehicle, which is often a factor for people considering the purchase a used EV.
As a electric vehicles ages and enters the used-car market, dealers have complained customers often refuse to buy and EV without this additional coverage, said Xcelerate vice president for sales Milad Davoodi to Reuters. Davoodi previously worked as Tesla's global manager for trade-in and used vehicle operations.
"The only way to get an extended warranty agreement from Tesla is if you buy the vehicle new from Tesla," Davoodi added. "If you bought a car from a dealer, you're not qualified."
"This was a problem that had to be solved."
The product warranty plan is called, "X-Care EV Protection", covers all fully-electric vehicles on the market, such as Nissan Leaf and the Chevy Bolt EV, and will be sold through dealers plus directly online.
The Tesla Model X has a warranty that is not transferable when the vehicle is sold.
The warranty coverage will extend to vehicles such as the Tesla Model 3 as deliveries ramp up. Although the car is new, in a few years the electric sedan might be available for less as a used model, as customer trade them in for newer electric models that are expected to hit the market in the next several years.
Tesla delivered 145,610 Model 3s in 2018, making it the best selling electric car in the U.S. last year.
Davoodi told Reuters that since the Model 3 is relatively new, it is hard to know what long-term problems the car will experience, if any. Although customers have already reported issues with the suspension, body panels, door locks, sensors and wiring harnesses.
Although electric cars have more expensive components, they also have fewer moving parts and wearable items. An extended warranty on a comparable gas-powered vehicle would generally be higher than an EV, because it has more moving parts and and the potential for breakdowns.
Xcelerate said the new warranty covers most major components of an EV. However, it does not include more expensive repairs such as replacing the battery pack or a failed electric motor.
The battery pack is one of the most expensive repairs out of any vehicle gas or electric. For example replacing the battery in a Tesla Model S out of warranty could cost an owner $10,000 or more in parts and labor.
Tesla offers an 8 year warranty on these components already, but it is non-transferable, making the purchase of a used Tesla a bit more risky without a warranty.
Davoodi said Xcelerate is looking at the possibility of offering add-on coverage to these components in the future.
The move by Xcelerate might make purchasing a used Tesla vehicle or another EV brand a better option for those buyer looking to save some money off the original sticker price. It also contributes towards the adoption of electric vehicles, giving potential buyer the piece of mind knowing that their used EV is covered by an extended warranty.
resource from: Reuters
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