Moreover, the warranty extension will apply retroactively to all Model S vehicles ever produced. In hindsight, this should have been our policy from the beginning of the Model S program. If we truly believe that electric motors are fundamentally more reliable than gasoline engines, with far fewer moving parts and no oily residue or combustion byproducts to gum up the works, then our warranty policy should reflect that.

To investors in Tesla, I must acknowledge that this will have a moderately negative effect on Tesla earnings in the short term, as our warranty reserves will necessarily have to increase above current levels. This is amplified by the fact that we are doing so retroactively, not just for new customers. However, by doing the right thing for Tesla vehicle owners at this early stage of our company, I am confident that it will work out well in the long term.

– Elon”

Furthermore, from Tech Crunch:

“Originally, the Model S carried a four-year, 50,000-mile limited warranty that could be extended to 8 years and 100,000 miles for an additional $4,000 fee. Musk says in his blog post detailing the move that “[i]n hindsight, this should have been [Tesla’s] policy from the beginning of the Model S program,” as the company’s warranty should reflect its belief in the improved reliability of its electric engines vs. their gasoline-powered equivalents.

Musk also notes to investors in his company that this will have a (moderate) negative effect on its earnings in the short-term, but says the move is designed to benefit the company long-term, owing to how it reflects Tesla putting its customers first.

The warranty extends to new owners upon resale of the Tesla S, too, so secondary markets also benefit. This is a huge goodwill gesture for Elon to make for its customers, and yet another shot across the bow of traditional fuel-injected gas engines. The fact that it applies retroactively makes it much more than a gesture, too, as they likely could’ve easily applied it going forward and still received praise from industry observers.”