Unwitting Warranties: A Ticking Time Bomb For The Battery Industry

dodgy battery sales guy

As soon as a battery manufacturer says this, your battery magically gets a 20 year warranty in Australia. No matter what the warranty document says.

The other day a salesperson give me the rundown on a home battery system he had on display.  While it wasn’t cheap, it certainly appeared to be a very impressive piece of technology.  The salesperson clearly had a lot of confidence in it because, even though its written warranty was only for 10 years, he very generously doubled that to a 20 year warranty without batting an eyelid.

Ben Affleck had his eyes batted for two hours a day in preparation for this role.

Ben Affleck would bat his eyelids for two hours a day in preparation for this role.

We weren’t related, so nepotism wasn’t the reason for his generosity.  And it wasn’t because I saved his life in Nam…bour.  (That sugar cane train could be really dangerous.)  We weren’t old schoolmates, and as hard as it may be to believe, he wasn’t taken in by my charm and good looks.

No, the reason why he gave me a 20 year warranty was simply because he didn’t realize he was giving one.  Or possibly, he did realize he was giving one and really hates his company.

He gave me a 20 year warranty when he told me the battery system had a design life of 20 years.  According to Australian Consumer Law, if a salesperson makes a statement that a reasonable person would conclude to mean that a product can be expected to last for 20 years, then that counts as a 20 year warranty.  It doesn’t matter that this warranty was given verbally or that it is twice as long as its written warranty, legally it still counts.

Unwitting Warranties Are A Ticking Time Bomb

Currently the residential battery industry is unintentionally giving away extended warranties willy-nilly and it is going to bite them on the bottom when consumers take them to court because a system they had been led to believe would last for 20 years stopped working after only 12.

There are many battery manufacturers who don’t realize the huge amount of potentially business destroying liability they are setting themselves up for by failing to ensure they aren’t unwittingly giving customers free extended warranties they never intended to.

They can be quite shocked when they do find out what they have done.

Anecdotal Evidence

Finn recently attended a talk on Australian Consumer Law at a solar energy conference.  He asked the lawyer speaking if a salesperson stating a battery had a design life of a specific number of years counted as giving a warranty for that long.  The speaker said it definitely did.  At the end of the talk the representative of a Chinese manufacturer came up to Finn and asked, “Is this true?”

When Finn assured him it was he looked dismayed and walked away shaking his head, presumably calculating how much trouble his company was in as a result of these Australians and their crazy consumer laws.

If battery manufacturers and resellers are to avoid being legally required to cover warranties they never intend to give, then many are going to have to immediately change the way they talk about and sell batteries.

It Is More Serious Than Solar Panel Warranties

The situation is quite different from the one with solar panels and their performance warranties, as many people aren’t going to bother to chase down the manufacturer when one panel fails, because a replacement may soon only cost $100.  But battery systems are much more expensive and people will be much more likely to go to small claims court to get their money back if their battery system doesn’t last as long as they were led to believe.

Australians Got Consumer Guarantees

Under Australian Consumer Law all goods sold by businesses for under $40,000 or over $40,000 if normally bought for personal or household use, come with a set of consumer guarantees.  These guarantees include, but are not limited to, the product being safe and performing as described.  But a very important one I see people in the home battery industry repeatedly ignoring is any express warranties must be honored.

Express Warranties

Any home battery systems sold by a business are automatically covered by Australia’s consumer guarantees.  Express warranties are any additional promises made about the performance of the product, whether written or verbal.  The written warranty a product comes with is one type of express warranty, but they also include any verbal promises made by salespeople.

It doesn’t matter if salespeople didn’t realize they were giving a warranty, had their fingers crossed, or kept repeating, “Wink, wink, nudge, nudge, say no more.”  The business must live up to any promises made, even if they were unintentional.

Statements don’t even have to be in the form of a promise to become an express warranty.  All that’s required is for a customer to have reasonably concluded from the information they were given that they could expect a product to last a certain number of years or provide a certain level of performance.

If a customer is told a product has a design life of 20 years they can reasonably conclude it will last 20 years.  If they are told how much they could save over 25 years, then they could reasonably conclude it will last for quarter of a century.  If they are told a system has 10 kilowatt-hours of capacity but aren’t told it will degrade over time they could reasonably expect it to have 10 kilowatt-hours of capacity until it reaches the end of of whatever they’ve been told its design life is.

Design Life

If you sell batteries, don’t say they have design life longer than the warranty you are willing to give.

Payback Time Estimates

If an estimate of the payback time of the system is provided that covers more years than the written warranty of the battery system, then that estimate becomes an express warranty.  At one battery sales pitch that was disguised as a lecture by getting a prominent Australian economist to talk about renewable energy at the beginning, a salesperson gave an estimate of how much a household could save by using rooftop solar plus their battery system over a 25 year period.

They didn’t make any mention that replacement battery systems would be required over this time, so anyone in the large crowd of people who were there could quite reasonably conclude the battery system could last for 25 years.  Maybe the company that gave the seminar is quite happy to replace battery systems over a quarter of a century when their written warranty was only for 10 years, but I very much doubt they are.

Battery Degradation

I constantly see battery systems being presented as having X kilowatt-hours of storage with no mention that in 5 or 10 years time their actual capacity could be X minus several kilowatt-hours. To get an idea of how much batteries are likely to deteriorate it is necessary to go digging into their written warranties and even then they may not have any solid figures but just a vague statement about “normal wear and tear”.

This puts manufacturers into a particularly dangerous position, because if the written warranty doesn’t give any numbers, then customers will only have other sources of information to go on such as advertising and what salespeople tell them, and if those sources lead them to reasonably conclude that its stated capacity is for its entire warranty period, this means they have been given a 100% capacity warranty.  And there are very few batteries on the market that can manage that.

It’s a similar situation for round trip efficiency figures.  Not once have I seen it mentioned that these can decline over time.

Battery Suppliers Can Be Liable

If a supplier merely states what the battery manufacturer’s warranty is, then they are fine.  They are not responsible for it.  But if they make any promises or declarations, or say anything that could reasonably be understood to mean the battery system will last longer than what the manufacturer’s warranty covers, then they are responsible for any express warranty they give that goes beyond the manufacturer’s.

Salespeople Need Crystal Clear Instructions

If you are a manufacturer or a reseller who employs people to sell batteries for you and you don’t want them putting you on the hook for who knows how many hundreds of thousands of dollars worth of liability, you are going to have to train them to never accidentally give an express warranty you are not fully okay with.  They have to be crystal clear on exactly what they can and can’t promise.

If your sales staff are under pressure to shift units no matter what, then you can end up with huge problems down the line as they may be tempted to say whatever it takes to make a sale.

Any advertising, company literature, or payback time estimates needs to be checked to ensure that no one could reasonably conclude that you are providing a warranty that you don’t want to give.

Manufacturers’ Warranties May Need To Be Improved

Battery manufacturers may think they won’t suffer any additional liability if they just provide a written warranty and don’t make any promises beyond what’s contained in it, but that’s not necessarily true.  Written warranties may need to be improved to be internally consistent.

For example, the manufacturer’s written warranty for the LG Chem RESU battery promises they will retain at least 60% of their nominal storage capacity for either 10 years or until they provide a specified number of kilowatt-hours of storage based upon their size.  That’s all reasonably straight forward and not a problem.

The warranty goes on to state that if they no longer produce RESUs they will have the option of compensating the customer with cash if their system fails to meet the terms of the warranty.  Offering a refund is perfectly fine according to Australian consumer law, but where the warranty falls down is in the amount that is offered.

While they will refund 100% of the purchase price of a RESU that fails in its first 2 years, the amount rapidly falls so that a RESU that is 5-6 years old will only receive 30% of its purchase price and one that is 9 years old will only receive 2%.% of purchase price refunded vs. year of failureLG Chem doesn’t have to offer to refund more than this in their written warranty.  But because they have issued a warranty that is for 10 years or a given amount of stored electricity, then it is reasonable for a customer to assume that if their RESU fails after 8 years after having used only 80% the total amount of storage its written warranty covers, then they are entitled to a refund of at least 20% of its purchase price, as they have only gotten 80% of the use out of it as they quite reasonably expected to from its warranty.  They could take LG Chem to their local consumer tribunal under Australian Consumer Law and I am confident LG Chem would be required to give a refund of at least 20% of its purchase price and not 4%.

Customers – Get Everything In Writing!

If you are a customer shopping for a home battery system, you may think, “Great, all I need to do is get the salesperson to say it has a design life of 20 years and I can easily double the warranty!”

Unfortunately, it’s not quite that simple.  If you end up taking it to court you will probably need some evidence you were given that verbal warranty.  For some reason, courts are really picky about evidence.  So if you want a free extended warranty when a salesperson flies off at the mouth, I suggest you get everything they promise in writing.

You could try recording them, but it’s definitely polite to ask for permission first, and with the possible exceptions of Victoria, Queensland, and the Northern Territory, it’s a legal requirement.

And note that even if a salesperson is happy to provide a written document which states a system’s design life is 20 years, then that company may be an irresponsible one that won’t be around in 15 years time when your battery system breaks down.

There Is Still Time To Defuse This Bomb

Home battery storage is almost certainly going to be huge industry in Australia.  But it has hardly gotten underway at the moment.  The first battery system that has a chance of paying for itself when used on-grid has only recently been announced and its first installation is still months away.  There is still time for staff to be trained and documents to be changed to prevent the explosion in warranty claims that may occur if those in the residential battery industry do not stop unwittingly giving warranties they do not wish to honor.

About Ronald Brakels

Many years ago now, Ronald Brakels was born in Toowoomba. He first rose to international prominence when his township took up a collection to send him to Japan, which was the furthest they could manage with the money they raised. He became passionately interested in environmental matters upon his return to Australia when the local Mayor met him at the airport and explained it was far too dangerous for him to return to Toowoomba on account of climate change and mutant attack goats. Ronald then moved to a property in the Adelaide Hills where he now lives with his horse, Tonto 23.

Comments

  1. Brilliant and highly accurate article Ronald. Thank you.

    It still amazes me how so few people in solar understand ACL and what it means for them.

    One question I have though (I’m asking you because your cheaper than a lawyer) ….. is it ok to say with respect to warranties that manufacturers are conservative when setting them but that the warranty is the warranty and let the prospective customer make their own judgement?

    • Ronald Brakels says

      Yes, unless manufacturers screw up, they will always set their warranties so as to keep the number of products they will have to replace to a minimum. Just what this number will be will vary according to the product and how lucky the manufacturer feels. Written warranties are a very good indicator of how much confidence manufacturers have in their products and, under normal circumstances, are generally the best information consumers have to go on and they can, in general, expect them to last longer than their warranty period.

      But a written warranty can in no way remove or reduce the consumer guarantees products come with. Example: If I buy a $3,000 TV with a 12 month warranty and it breaks down after 15 months I am still entitled to a repair, replacement, or refund because no reasonable person would shell out $3,000 for a TV if they didn’t expect to get more than 15 months use out of it.

  2. But uh didn’t you just say in the article it has to be a written warranty? Otherwise according to law it would be a he said she said situation and a lawyer would not touch it with a barge pole unless it was in writing.
    That is the way it operates otherwise it’s no better than a hand shake.
    Design life is theoretical its not a given.
    I doubt this express or expressed warranties have legs to stand on .

    • Ronald Brakels says

      Eric, if a salesperson says, “Our product has a design life of 20 years,” then that is an express warranty. Now the salesperson could lie and deny they ever said that, or they could honestly forget they said that. But it is still a warranty. The difficulty lies in demonstrating that it was given.

      If the salesperson is offering a battery system with a 10 year written warranty, but they hand you a piece of paper that explains how much you can save with the system over 25 years then, unless they have made it very clear that multiple battery systems will need to be purchased, that counts as giving a 25 year warranty. In this case you have a piece of paper you can show in court as evidence that you were reasonably led to believe the system would last 25 years. That is an express warranty just the same as the written warranty is an express warranty and according to Australian Consumer Law all express warranties must be honored.

      This page at the Australian Competition and Consumer Commission gives more information:

      https://www.accc.gov.au/consumers/consumer-rights-guarantees/warranties

      • Erik Christiansen says

        It seems to me that a cost calculation over 25 years, which does not _itself_ include the cost of replacement batteries, is an explicit statement that no battery replacement will be required in that period. If it includes one replacement cost, then we’re up from 10 to 12.5 years warranty, which may cost the supplier a bit, due to the “bathtub curve” of product failure rate versus service life. (A few “infant mortalities”, due to manufacturing defects, dropping sharply to a long flat period of few field failures, then a steady climb as the products in the field wear out.) The warranty period needs to fall short of that third phase, to keep the money flowing in one direction.

        If there’s a “diminishing capacity” rider in the product doco, but the costing denies that, then perhaps it becomes a lawyer’s picnic.

      • precisely what i said. if its not in writing or witnessed by a third party you have bucklies.
        saying what you can save over 25 years is not actually saying the unit is warranted for 25 years ,there is a difference and I do not know of any sales person who would do that and hand you a hand written warranty as it would be counter to the warranty offered by the manufacturer and would be in breach of company policy to do that.
        if it were to happen all you would get would be an apology from the company and the sales person would probably loose their job because by writing a warranty he would not be acting on behalf of the company unless the company had prior knowledge to his hand written warranty.

      • This would most likely be treated as false or misleading representation and if proven the company could be fined up to $1.1 million dollars

  3. Ashley clark says

    Hi Finn I am a solar supplier installer that has sold and installed the Aquion batteries since they have now gone bust who holds the warranty’s me the seller or Aquion no longer around

    • Hi Ashley,

      Under Australian Consumer Law, assuming it is classed as a consumer transaction (not a big commercial job), then the contract is between the consumer and the entity that took their money. I assume that’s your company.

      That means that your company has to honour all warranties regardless of what happened to Aquion.

      Now if you bought your batteries off an importer, whether you can claw back costs from them will depend on the commercial contractual agreement you have with that vendor.

      Hope That Helps,

      Finn

  4. David John Edney says

    Great article and timely. I have been offered an installation of 24 x 2volt cells and the spec sheet states that I can expect 6000 cycles at 40% depth of discharge. As my system will be set to this level before the grid kicks in, can I assume that the 6000 will be the warranty. (about 16 yrs assuming 1 discharge per day to 40%. )

    • Ronald Brakels says

      I’m afraid the warranty is not likely to be that long. I don’t know any company that provides a 16 year warranty for a battery. You may find the actual warranty is only for 2 years or less. You are protected by Australian consumer law so if the information they gave you would lead a reasonable person to believe the batteries have a 16 year warranty that’s what they have to provide, but it’s much better not to have to try to fight a company to provide what they led you to believe would be the warranty.

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