6 ms·

I recall this article about the total maintenance costs of a Model X cab with 400k miles. It’s a very interesting look at total cost of ownership over time. ht

by captrb 5y ago

I recall this article about the total maintenance costs of a Model X cab with 400k miles. It’s a very interesting look at total cost of ownership over time. https://electrek.co/2020/05/11/tesla-model-x-extreme-mileage-repair-maintenance/ https://electrek.co/2020/05/11/tesla-model-x-extreme-mileage...

rsj_hn 5y ago
That is, unfortunately, anecdata. Everyone keeps telling me that electric cars have fewer moving parts and have such low maintenance costs that they cost 90% less to maintain, at which point I turn around and ask why Tesla doesn't offer a bumper to bumper 20 year warranty, because they can benefit from the law of large numbers. If the repair costs are so much better, this should be easy to do, right? That's the point where my interlocuter usually walks away as they have no answer. One way you can try to estimate what the real maintenance cost is in the first X years is to look at what automakers set aside for warranties. In that case, (the last I looked), Tesla seemed in the middle of the pack vis-a-vis major ICE makers. But then you have the 20-X years of service, and the dirty secret is that those years are also paid for by new owners except they pay those repairs forward as depreciation when they sell. So then you look at depreciation curves, to see if Tesla is holding up much better than ICE vehicles due to lower expected maintenance costs and there, too, Tesla appears to be right in line with other major producers. So bottom line, I can't find any evidence for the thesis that getting rid of all these components will significantly reduce lifetime maintenance costs, while the battery costs remain a big unknown. Now part of this is just not having enough data. In 20 years, we'll have a lot more data, and then maybe the warranty policies and depreciation curves will look very different. But this goes back to my point which is why isn't Tesla insuring the buyers against this risk by selling massive 20 year waranties to stand behind these claims of long service life and very low maintenance costs? Why leave people searching for anecdata in a new car whose service costs they don't have the data to estimate? For most people a car is a major portion of their net-worth and they tend to be conservative in making this purchase. Sure, for high income buyers, they can afford to take risks but most buyers can't. So why doesn't Tesla do more to insure prospective buyers against this risk? It seems like such a no brainer, and yet many companies insist on pushing risk onto the customer. This isn't just an issue with Tesla, but I see it in many industries, where the producer is the one who has the survivorship data, they benefit from the law of large numbers, and they have financial backing, they are in a position to sell insurance, and people would buy the insurance, but the insurance just isn't being offerred, and if it is offered, it's on absolutely terrible terms, rather than as something to remove purchase frictions.
- vagrantJin 5y ago
  I dont really know why you are getting downvoted for a well reasoned counter-argument to the boundless optimisim.
- danpattn 5y ago
  Tesla doesn't have a problem selling the cars it makes. Why take on an additional financial risk in order to increase demand?
  - rsj_hn 5y ago
    That's a good argument. But if you think Tesla is averse to taking on risk, how much more risk-averse would the customers take on? Tesla has the law of large numbers and technical data available to them. They are in a position to arbitrage that and get (expected) free money by selling long term insurance to buyers for whom the insurance is a lot more valuable than what it costs Tesla, so why wouldn't they do that? If indeed the EVs are so much more durable and have such lower maintenance costs but are surrounded by a cloud of doubt, why not remove that cloud? Even if Tesla doesn't ramp up production faster, the increased demand would allow them to command a higher price until production was ramped up. So if indeed the market is wrong and depreciation curves are too steep, Tesla can arbitrage that. Why they don't should raise some questions, at least it does to me.
    - matmatmatmat 5y ago
      I'm not finding a hole in this argument. It's especially interesting because Elon has a reputation as a risk-taker, so I would expect him to steer Tesla in this direction if it were possible and profitable.
    - deleted 5y ago
      [deleted]
- jliptzin 5y ago
  Even if it’s not 90% less maintenance cost, I can tell you in the 2 years since I’ve owned my Model 3 (20k miles) I’ve brought it in for maintenance items zero times. In an ICE car that would have been like 6 annoying oil changes by now? That’s more than enough to convince me.

by captrb 5y ago

rsj_hn 5y ago

That is, unfortunately, anecdata. Everyone keeps telling me that electric cars have fewer moving parts and have such low maintenance costs that they cost 90% less to maintain, at which point I turn around and ask why Tesla doesn't offer a bumper to bumper 20 year warranty, because they can benefit from the law of large numbers. If the repair costs are so much better, this should be easy to do, right? That's the point where my interlocuter usually walks away as they have no answer. One way you can try to estimate what the real maintenance cost is in the first X years is to look at what automakers set aside for warranties. In that case, (the last I looked), Tesla seemed in the middle of the pack vis-a-vis major ICE makers. But then you have the 20-X years of service, and the dirty secret is that those years are also paid for by new owners except they pay those repairs forward as depreciation when they sell. So then you look at depreciation curves, to see if Tesla is holding up much better than ICE vehicles due to lower expected maintenance costs and there, too, Tesla appears to be right in line with other major producers. So bottom line, I can't find any evidence for the thesis that getting rid of all these components will significantly reduce lifetime maintenance costs, while the battery costs remain a big unknown. Now part of this is just not having enough data. In 20 years, we'll have a lot more data, and then maybe the warranty policies and depreciation curves will look very different. But this goes back to my point which is why isn't Tesla insuring the buyers against this risk by selling massive 20 year waranties to stand behind these claims of long service life and very low maintenance costs? Why leave people searching for anecdata in a new car whose service costs they don't have the data to estimate? For most people a car is a major portion of their net-worth and they tend to be conservative in making this purchase. Sure, for high income buyers, they can afford to take risks but most buyers can't. So why doesn't Tesla do more to insure prospective buyers against this risk? It seems like such a no brainer, and yet many companies insist on pushing risk onto the customer. This isn't just an issue with Tesla, but I see it in many industries, where the producer is the one who has the survivorship data, they benefit from the law of large numbers, and they have financial backing, they are in a position to sell insurance, and people would buy the insurance, but the insurance just isn't being offerred, and if it is offered, it's on absolutely terrible terms, rather than as something to remove purchase frictions.

vagrantJin 5y ago
I dont really know why you are getting downvoted for a well reasoned counter-argument to the boundless optimisim.
danpattn 5y ago
Tesla doesn't have a problem selling the cars it makes. Why take on an additional financial risk in order to increase demand?
- rsj_hn 5y ago
  That's a good argument. But if you think Tesla is averse to taking on risk, how much more risk-averse would the customers take on? Tesla has the law of large numbers and technical data available to them. They are in a position to arbitrage that and get (expected) free money by selling long term insurance to buyers for whom the insurance is a lot more valuable than what it costs Tesla, so why wouldn't they do that? If indeed the EVs are so much more durable and have such lower maintenance costs but are surrounded by a cloud of doubt, why not remove that cloud? Even if Tesla doesn't ramp up production faster, the increased demand would allow them to command a higher price until production was ramped up. So if indeed the market is wrong and depreciation curves are too steep, Tesla can arbitrage that. Why they don't should raise some questions, at least it does to me.
  - matmatmatmat 5y ago
    I'm not finding a hole in this argument. It's especially interesting because Elon has a reputation as a risk-taker, so I would expect him to steer Tesla in this direction if it were possible and profitable.
  - deleted 5y ago
    [deleted]
jliptzin 5y ago
Even if it’s not 90% less maintenance cost, I can tell you in the 2 years since I’ve owned my Model 3 (20k miles) I’ve brought it in for maintenance items zero times. In an ICE car that would have been like 6 annoying oil changes by now? That’s more than enough to convince me.