"That's a bad deal for Tesla. It could mean financial ruin if there are too many irresponsible owners."
On the contrary, if there are too many irresponsible owners then Tesla is ruined if they DON'T cover it. Imagine what "too many Tesla bricked cars" would do to their product image.
Look, this is very simple. Warranty systems are underwritten like insurance policies. It's little risk to Tesla -- the question is the underwriter's risk assessment. If the underwriter won't cover it on affordable terms, it suggests the risk is too high and the product is poorly designed. At that point, the path of failure is chosen (expensive underwriting policy vs expensive PR debacle) is irrelevant. The only issue is whether the risk assessment is accurate -- it becomes a gamble.
On the contrary, if there are too many irresponsible owners then Tesla is ruined if they DON'T cover it. Imagine what "too many Tesla bricked cars" would do to their product image.
Look, this is very simple. Warranty systems are underwritten like insurance policies. It's little risk to Tesla -- the question is the underwriter's risk assessment. If the underwriter won't cover it on affordable terms, it suggests the risk is too high and the product is poorly designed. At that point, the path of failure is chosen (expensive underwriting policy vs expensive PR debacle) is irrelevant. The only issue is whether the risk assessment is accurate -- it becomes a gamble.