Lawsuit claims Tesla sells its lemons as CPO

[AmpedRealtor]

I just saw this in the news, some in my local group have confirmed that they purchased CPO vehicles that have had significant body work that Tesla did not disclose prior to purchase. Is this something to be concerned about?

A former employee says Tesla sells “lemons” in a new lawsuit

 

[P85DBeast]

YESSSS!!! This is most def. a concern....Tesla should at least notify the people that they are buying lemons and car's that have had body work. It's not ok for a manufacture to deceive the customer's...That's how you lose customer's.

 

[MP3Mike]

It isn't a "lemon" unless it has gone through the lemon law process for the state it is in. (So if Tesla makes a buy-back offer before you get to that point it isn't actually a "lemon".)

As far as body work on CPOs, I'm not aware of any regulation requiring that body work be disclosed on used car sales. (There is such a law that significant body work on new cars has to be disclosed.)

So I'm not sure that Tesla is doing anything wrong legally, but it is on shaky grounds morally.

 

[Tiger]

What's the difference between manufacturing bodywork by Tesla and bodywork done after a buyback by Tesla?

 

[Tam]

CA DMV says:

"What is a Lemon Law Buyback Vehicle?
A Lemon Law buyback vehicle is a vehicle that has been reacquired by the manufacturer, on or after January 1, 1996, because of specified warranty defect(s). The vehicle must be registered in the manufacturer's name prior to resale to a member of the public."

So the question for the whistle blower from the lawsuit is: Did Tesla buy back a vehicle "because of specified warranty defect(s)."?

If so, the California law requires Tesla to disclose such fact and also all repairs "to correct each nonconformity".

...So I'm not sure that Tesla is doing anything wrong legally, but it is on shaky grounds morally.

When you buy a CPO or used car from Tesla, Tesla's policy has been to honor owner's confidential information including not disclosing a car's repair history.

There's nothing wrong with that as long as that's the policy.

However, when Tesla buys back a car that satisfies DMV's lemon criteria, it is no longer about policy: It is now about the law: Tesla must register it as Lemon Titled. It must disclose that fact to new owner. And it must disclose all nonconformity and all repairs to correct that.

 

[SMAlset]

That article also brings up that rumor that employees were "Putting together batteries by hand" when in fact what came out was that the automated equipment ended up requiring employees to move assembled pieces manually down the production line from station to station. That's much different than the impression one gets from the above comment where I know I pictured employees taking each little battery component and placing them into the case (or whatever it's called) or literally building the battery pack cell by cell.

It's my understanding that CPOs come into the program in all kinds of shape from the owners and Tesla will bring them up to resale-ready and offer them at a discounted price compared to new. I'm sure this includes cars that owners rejected or had issues with and I would presume were fixed prior to resale. Anything from body work, paint, replacement parts, cleaning of surfaces.

 

[Tam]

...had issues with and I would presume were fixed prior to resale...

There's a difference between 2 hypothetical scenarios:

1) No-warranty related:

Prior owner had a collision on the falcon wing which makes it permanently opened even when the car is at 65 MPH!

That car was sold to Tesla because the owner wants to pay for a new car and doesn't want to fix the old car.

Tesla fixed or replaced that falcon wing and sold it to a new owner without the word "Lemon Titled" on the paperwork and without disclosing the car history.

That is all fine and proper because it's not warranty related.

2) Warranty related:

Tesla bought back the car because the prior owner complained that the Falcon Wing has been repeatedly opening on its own while driving at 65 MPH and it has been in repair shop for at least 3 times for more than 30 days and the owner is unwilling to do it the 4th time again with unknown additional numbers of days!

My understanding is if Tesla bought this car without going to court or any official process, once the owner has met the lemon law criteria: the same component repaired for 2 or more times and for more than 30 days, Tesla then needs to fulfill the law by register this car as Lemon Titled. It must disclose the fact to a new buyer including "Lemon" status and which repairs were done.

 

[Tam]

...in fact what came out was that the automated equipment ended up requiring employees to move assembled pieces manually down the production line from station to station...

CNBC reported:

Tesla employees detail problems with Model 3 battery production and quality control

Manual assembly includes: Bolting down and gluing the outer clamshells which is not a safety issue according to 2 Tesla engineer whistle blowers.

However, it also involves manually slapping bandoliers together which 2 Tesla engineer whistle blowers are voicing safety issues: Cells might be manually mis-aligned, too low, too high and the minimum gap between cells might be manually uncomplied which might cause a short or fire.

Tesla told CNBC ""Until we reach full production, by definition some elements of the production process will be more manual."

Additionally, Tesla dismissed the danger of manual assembly because if 2 cells are touching, "there would be absolutely zero impact, safety or otherwise".

 

[David.85D]

Fwiw, Ive had many interior panels off doing various mods, giving me a good chance to inspect the inside of the body panels (its much harder to hide signs of damage there) and have looked for and not found any sign of body work on my cpo. They did disclose that they repainted the rear bumper during the cpo process, but looking on the inside of it, there is no damage apparent. I think they only told me to explain the delay.

 

[SMAlset]

CNBC reported:

Tesla employees detail problems with Model 3 battery production and quality control

Manual assembly includes: Bolting down and gluing the outer clamshells which is not a safety issue according to 2 Tesla engineer whistle blowers.

However, it also involves manually slapping bandoliers together which 2 Tesla engineer whistle blowers are voicing safety issues: Cells might be manually mis-aligned, too low, too high and the minimum gap between cells might be manually uncomplied which might cause a short or fire.

Tesla told CNBC ""Until we reach full production, by definition some elements of the production process will be more manual."

Additionally, Tesla dismissed the danger of manual assembly because if 2 cells are touching, "there would be absolutely zero impact, safety or otherwise".

Somewhat interesting read from January when it was known there were line production issues at the factory. I've watched CNBC now for many years and don't think as highly of them as I first did especially when doing stories on companies/stocks that are more volatile in the market place. I take their stories with a grain of salt especially when it comes to indepth investigating before reporting. That being said, as for the bandolier section of the article, when I read they reported that they were trying to work as fast as they could assembling them by hand and that they had "a lot of scrap" to me that says that things were rejected that weren't done correctly. So quality control was in place. Not exactly the impression you get from the way the article is written. Also noted that the article said that the workers were from Panasonic, who's been producing batteries for Tesla and others for years. Once the operation had improved they were sent back. Sounds to me like they brought in partner help to straighten things out (you'd think they'd be trained but being thrown onto a new line I could see some learning time involved). Tesla was also looking to hire more workers back then so as with any training period it takes time to get people knowledgable in their position.

As for some of the other safety or testing concerns brought up in that article, hard to say as you have Tesla saying they weren't an issue. No doubt there were issues at the factory such that it prompted Elon to camp out there while their teams worked on how to fix them. That's what I would expect to happen in any company.

But back to the topic of this thread of the employee who sounds like he was saying Telsa was selling "lemon" designated cars without disclosure, we don't know if in fact the cars were officially lemon status or if he correctly understood the legal difference. If he was telling customers/people Tesla was selling "lemons" when in fact they weren't and was informed they weren't and he continued with that line, I can see why he would be fired from his position. Now without a job then want to sue them. Don't really have much factual information to go on here.

 

[SMAlset]

This article published in The Verge has more info on the plaintiff and the Complaint pleadings are there to read if you're so inclined. Haven't read the legal complaint yet but whereas I thought a few minutes ago maybe he kept pushing this issue of lemons not sure that sounds like the case after reading what was written in The Verge article. I think Tesla has 30 days or so to file a response so for right now only one side to the Complaint. They've asked for a Jury I see.

Tesla accused of knowingly selling defective vehicles in new lawsuit | The Verge

 

[robby]

One thing that drives me nuts about "lemon" discussions is that they revolve around human emotion rather than utility or statistical meaning. A car that's had body work repairs to factory specs is no worse aesthetically or structurally than a car that didn't have body work. A given car may be slightly worse or slightly better due to the law of averages, but on the whole it doesn't tell you anything useful about the car. The same is true for past mechanical issues or replaced parts. If a drive unit was replaced multiple times, it may classify as a lemon by some legal definition, but it doesn't tell you anything about the likelihood of the new drive unit to fail. I don't think Tesla (or any other manufacturer for that matter) should have to tell customers something that gives little to no objective information but will almost surely play to their emotions, especially when the manufacturer is warrantying the car the same as it would any other.

 

[Tam]

...If a drive unit was replaced multiple times, it may classify as a lemon by some legal definition, but it doesn't tell you anything about the likelihood of the new drive unit to fail. I don't think Tesla (or any other manufacturer for that matter) should have to tell customers something that gives little to no objective information but will almost surely play to their emotions, especially when the manufacturer is warrantying the car the same as it would any other.

I think you missed the point of lemon law/lemon titled: To encourage companies to spend more on Quality Assurance and present its products to owners with competency and not sloppiness.

It is true that if a car is replaced with a drive unit multiple times and qualifies as a lemon definition, that won't predict how reliable the next drive unit will be either!

However, if the company is slapped with lemon designation so many times, it will likely be motivated to fix its drive unit design so that it won't qualify for a lemon award any more!

 

[Tam]

...I think Tesla has 30 days or so to file a response so for right now only one side to the Complaint....

Tesla did issue a response to the press (although it is not a court filing):

“There’s no merit to this lawsuit. Mr. Williams’ description of how Tesla sells used or loaner vehicles is totally false and not how we do things at Tesla,”

That sounds like Tesla obeys the lemon law and title their cars as such and would not hide that fact from the public.

“It’s also at odds with the fact that we rank highest in customer satisfaction of any car brand, with more owners saying they’d buy a Tesla again than any other manufacturer."

Tesla owners might be a cult member so they may keep drinking the Kool-Aid no matter how many times they have to visit Service Centers. So, That is not a very good legal reason to prove that because owners are happy and such happiness is an indication that Tesla didn't sell them lemon-qualified cars.

"Mr. Williams was terminated at Tesla for performance reasons, not for any other reason.”

Tesla denies firing him because he's a whistle blower.

There! Now, we have heard from BOTH sides!

 

[Mediocrates]

My understanding is if Tesla bought this car without going to court or any official process, once the owner has met the lemon law criteria: the same component repaired for 2 or more times and for more than 30 days, Tesla then needs to fulfill the law by register this car as Lemon Titled. It must disclose the fact to a new buyer including "Lemon" status and which repairs were done.

I don't believe this is correct. If the owner does not go through a legal process (such as arbitration or lawsuit), then there are no "Lemon Law criteria" involved because there is no "law" involved. Tesla can pro-actively make an offer to the owner prior to (or in lieu of) legal action and hope the owner takes it. This offer probably won't be as good for the owner as the legal settlement, and Tesla is not obligated to make that offer.

I've had discussions with my Service Center manager about this, since my vehicle was getting close to triggering one of the Lemon Law criteria (30+ days out of service in the first 18 months). We talked about how Tesla would handle this, and he said they would pay me the original purchase price of the vehicle. Legal action would yield more than that (purchase price, taxes, registration, attorney fees, etc.). Tesla's offer might also include a non-disclosure agreement as to keep it "quiet." That is speculation, but there are stories of owners who have accepted buyback and they do not speak of the matter. Legal action would not include any such NDA. Legal action would also yield a classification on the title that is a "Lemon Law" vehicle, which would substantially reduce its resale value for Tesla. The pro-active offer would not.

From my experience and analysis, it would be notably in Tesla's favor for an owner to accept the pro-active offer, if the vehicle in question fairly clearly meets one of the Lemon Law criteria.

 

[Tam]

...If the owner does not go through a legal process (such as arbitration or lawsuit), then there are no "Lemon Law criteria" involved because there is no "law" involved...

I am no lawyer so I don't have a definitive answer. I only interpret what CA DMV says.

You've got an interesting point on how to go around the lemon law by skipping a legal process. The article below:

Is BMW Selling Bought-Back Lemons as 'Certified Pre-Owned'?

described such practice from BMW who wrote a check for $12,600 that's marked "cash settlement for fuel pump related issues" and the car's title was not branded and it's listed as excellent used car. When you look up Carfax, it would say "no problem".

This practice is called "laundered title" which is illegal.

 

[gork]

What's the difference between manufacturing bodywork by Tesla and bodywork done after a buyback by Tesla?

The body panels will line up on the aftermarket work?

 

[demundus]

The body panels will line up on the aftermarket work?

Tesla has professed to me on every occasion that they don't do body work, not even a little. So going to a "shop", and getting it done would yield the same outcome... and panels still wouldnt line up, ask me how i know

 

[aollivierre]

My cpo experience has been horrible. Although Tesla has fixed all of my issues, my car has been in the shop more than I’ve liked in the past 6 months. One of these shop visits actually lasted over 30 days.

I purchased a cpo for piece of mind. Now, no money has come out of my pocket and that is certainly a good thing. But since day one I have asked for cpo docs which Tesla has never provided because it could not be found. Keep in mind I have been since the day I purchased the vehicle. Finally I got fed up and sent a nasty note to every email address I could find for Tesla during my last service visit demand cpo paperwork and perhaps a partial refund due to misrepresentation of the vehicle I purchased. Suddenly within 24hrs, I get a call from the service center with a solution. Since the vehicle’s cpo paperwork could not be found (translation: IT NEVER HAPPENED). Tesla has agreed to perform a full cpo child on my vehicle while it was in the shop. Of course during this process, I had to be out my car and other issues where found which again, required more parts to be ordered and yes more time away from my car......craziness......

Should I.....,

A) Continue up the corporate latter due to misrepresentation by the company and selling me a car that was not truly cpoed

B) ask for some type of refund due

C). Walk away and have a drink?

Don’t get me wrong, I love the car but the time and effort I have put into driving to the service center for all of these things that should of been fixed, caught and resolved prior to me buying a CPO vehicle has been draining.......

I am truly trying to keep legal away from this situation but I feel like Tesla is attempting to get one over on me......

Thoughts.....

 

[Electricious]

My cpo experience has been horrible. Although Tesla has fixed all of my issues, my car has been in the shop more than I’ve liked in the past 6 months. One of these shop visits actually lasted over 30 days.

I purchased a cpo for piece of mind. Now, no money has come out of my pocket and that is certainly a good thing. But since day one I have asked for cpo docs which Tesla has never provided because it could not be found. Keep in mind I have been since the day I purchased the vehicle. Finally I got fed up and sent a nasty note to every email address I could find for Tesla during my last service visit demand cpo paperwork and perhaps a partial refund due to misrepresentation of the vehicle I purchased. Suddenly within 24hrs, I get a call from the service center with a solution. Since the vehicle’s cpo paperwork could not be found (translation: IT NEVER HAPPENED). Tesla has agreed to perform a full cpo child on my vehicle while it was in the shop. Of course during this process, I had to be out my car and other issues where found which again, required more parts to be ordered and yes more time away from my car......craziness......

Should I.....,

A) Continue up the corporate latter due to misrepresentation by the company and selling me a car that was not truly cpoed

B) ask for some type of refund due

C). Walk away and have a drink?

Don’t get me wrong, I love the car but the time and effort I have put into driving to the service center for all of these things that should of been fixed, caught and resolved prior to me buying a CPO vehicle has been draining.......

I am truly trying to keep legal away from this situation but I feel like Tesla is attempting to get one over on me......

Thoughts.....

It's these kind of stories that make it really scary for me to consider buying a CPO car and sorry to hear about the hassle you are going through. If I go the CPO route, I will do my best to avoid such a situation by demanding to see the service and CPO history for the car and inspect the car in person and refuse delivery if there are issues.

However in your case you have already invested time (and money!) on finding a vehicle you like. At the end of the day, I have every confidence that Tesla will make it right for you so take a deep breath and rather than escalate your displeasure, look for a solution. This is what I recommend that you do:

1. Make a thorough list of EVERY THING that you want fixed in your car. Seems they did a poor job preparing your car. Have them agree to do everything on your list and for additional piece of mind, perhaps have a Tesla approved body shop look over the car to make sure you don't have repainted panels or any other damage that you were not expecting.

2. Ask Tesla for a loaner until all the issues identified are fixed.

3. Rather than some type of refund, ask for complimentary service visits for your hassle. This gives you something of value but does not cost Tesla the same as refunding any money and this arrangements is better for you and Tesla.

You are right -- The reason you are paying a premium for a CPO vehicle is to get a gently used car that is thoroughly reconditioned so you can buy a car in almost immaculate condition. We've bought other premium CPO cars before and each was presented to us in immaculate condition.

I think a big part of the reason the Tesla CPO buying experience is a crapshoot is because there is no accountability. They don't list the actual photos so no one bothers to recondition the car when the car listing goes up and worse yet some CPO cars are used as loaner cars and I bet some of those cars get the crap beatenen out of them making the CPO conditioning process that much harder.