Tesla Motors Inc CEO Elon Musk has indicated to investors that 2016 will mark a turning point for the company, as it will reduce overhead and post a profit. Minimizing costs associated with quality issues will be essential if Tesla is to fulfill that promise.
While Tesla has been able to reduce warranty repair costs by 17 percent since 2014, its 2015 annual report indicated that it spends an average of $1,042 per vehicle for repairs and reserves $2,036 to cover future warranty work.
By comparison, in 2015 General Motors spent $400 per vehicle to address warranty issues and set aside $332 in accruals to cover future repairs. Ford spent $429 for warranty repairs and reserved $308 per vehicle, while Daimler spent $970 and set aside $1,294 for each vehicle that it sold.
Tesla reported a net loss of $888.7 million in 2015, with cash reserves of $1.2 billion, down $708 million from the previous year. Vehicle warranty costs amounted to $52.8 million, with an additional $103 million reserved to cover future repairs.