Did you actually miss my point and are actually asking with an open mind for an explanation - or are you just here to debate?But what "shady sales tactics" are we talking about here? What exactly was shady?
The OP got (or will get) exactly the car he ordered, and exactly the price he wanted. And as a bonus, he has the opportunity to upgrade to something much more than what he was expecting for pennies on the dollar. (And in actuality, not taking advantage of the upgrade would be screwing yourself).
I just see nothing shady here. If the exact car that the OP ordered dropped in price a week later by several thousand dollars, then we have something to complain about. But that's not what happened. They didn't change his order, they didn't charge him more, they didn't make him wait, and they gave him the opportunity to essentially get the new upgraded vehicle for a very low price. The only issue is that if he had ordered 2 weeks later he would have saved a bit.
Let's put things in perspective. The $500 change fee amounts to a price penalty of less than 1% on his car. That's exactly analogous to purchasing a cheeseburger today at $6.99 only to learn that tomorrow they've dropped the price to $6.92. And for that, we're throwing around the words "shady" and "misled"?
Balderdash.
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Umm...yeah...actually there are, literally hundreds of thousands. Have you ever heard of a price-match guarantee? Do you remember a place called Circuit City from the 1990s? Ever been to Best Buy or Costco? Not a "pre-annoucement", but if you noticed a price drop within a reasonable period of time (60-90 days) you'd probably get a refund of the difference. If not your credit car might give it you.
The reason, many speculate, Tesla did not just discontinue 60D is that they wanted to create a demand lever for Q2. Cars ordered in early Q2 and cars they can deliver to most markets inside Q2 and thus count as sales come the next quarterly report.
So by applying this pressure through their policy changes and subsequently their sales network, they, again speculation, seem to have wanted to sell and deliver more cars in Q2. Cars ordered later in Q2 may not get to customers in time, hence pressure to order 60D in April.
Thinking goes, the arguably shady business tactics were in Tesla's short-term interest - like so many other quarterly sales games they play. The debate about whether this is in their long-term interests, though, rages on.
This has also been labelled a "reverse discount". Since Tesla does not do discounts or discount campaigns in the traditional sense, they have to (well, choose to) pre-announce future changes (to an extent), to create a sense of urgency. And yes, it results in rather stupid circumstances.
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Amazon.com has the pre-order price guarantee (separate from price matching that went away some time ago). If the price goes down before you get the goods, they will match that. If it goes up, you still get the original price. And Amazon.com gets your order because you feel secure in jumping in earlier.
Frankly, with the long delivery times of Teslas, having that kind of policy in place for delivery would just be smart. On delivery date, the best price for the customer is used - if the best price is the order-time price, that is used, if it later changed to a better one, that is used.
Retroactive application (i.e. after delivery) I don't think would be needed. You have to draw the line at somewhere and a car purchase has so much more paperwork etc. But using the best price on delivery day would have solved this incident with a happier customer.
And do away with the stupid $2,500 non-refundable deposit, which to me is very un-classy. It's Tesla's attempt to force you to buy a car, which essentially is a commodity item. Despite what they have you sign regarding liquidated damages, I doubt it would hold up in a CA court. Certainly it's not worth the $2,500 for Tesla to go to court/arbitration over it.
Personally I'm not aganst a non-refundable deposit on a custom order. But I do dislike it if people are tricked into placing that deposit. The policies causing that perception should be changed.
RogerHScott
Active Member
SomeJoe7777
Marginally-Known Member
Yes, I'm actually interested in your thought process -- what part of the sales process here bothers you?
I'm trying to put myself in the OP's shoes and think about the steps he went through to order his 60D, agree on a price, and then have this change occur. If this were me, I can't see where I'd be upset.
So your position is that it is appropriate for a customer to place a custom-built order on a $70-150k item and be able to walk away from that order at any time prior to the immediate point of taking delivery with no repercussion?
How does Tesla force anyone in the United States to purchase one of their vehicles?
None of what you describe is a problem. The OP's bitter taste is from her perception that reps implied the 60D's disappearance was essentially to mean the cost to get into a Model S was soon going up - this generating the urgency to purchase - when in fact the cost was about to go down. This is a kind of soft duplicity. I'm not here to question whether the OP's perception of her sales rep's implication is correct - I wasn't there. I start by taking her at her word and then deciding whether that is a slimy tactic. To me it is. I'm also not here to argue whether or not a sales rep truly knows what's coming or represents Tesla. The reasonable position for a customer off the street to take is that the sales rep does have some knowledge of what is coming. The "reasonable person " test is used frequently and K think it applies here.
Yes.
This isn't really a "custom" built product when they're making 20,000+ a quarter. This is a commodity item. If I don't take it, someone else will. There is a 40% margin already built into the purchase price.
And I've "custom ordered" many cars in the $100,000+ price range and the deposit has ALWAYS been fully refundable, if for some reason I decided to not take possession of the car, even at the last second.
Oh yeah, and despite what you sign, the non-refundable deposit is not really enforceable in CA. No judge is going to be convinced that Tesla sustained $2,500 in liquidated damages anyway. This is just an intimidation tactic used by Tesla to force you into buying a car. Do you think Porsche, Mercedes, or BMW pull these tricks?
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You are right that with the super-limited amount of customization available to Tesla buyers, they are not really all that customer orders. They could simply place the car to inventory and it would likely move fast without much extra cost or hassle.
That said, mileage varies, personally I do not consider Tesla's non-refundable deposit an unfair one. It is nowadays quite reasonably sized and has get-outs for the usual consumer protections in many markets such as failure to obtain financing. Tesla has also shown interest in some level of negotiation a fair outcome in special circumstances. (I walked away from my first Model X order, replaced by the AP2 car, and felt it was handled fairly by Tesla.)
I get your point, though, so certainly this is a mileage varies thing. Certainly as a customer/consumer I appreciate it when the seller does offer flexible cancellation. It is better service for me, definitely, and hopefully long-term pays off for them as well.
The problem with the Tesla deposit is IMO if customers are pushed into placing it under questionable circumstances and afterwards, like OP, the communication channels just shut down... @calisnow described it why this is not cool:
The $2,500 "non-refundable" deposit reeks of used-car salesman to me, hence why I consider it un-classy.
As if someone is going to let Tesla keep $2,500 in exchange for receiving nothing.
As if someone is going to let Tesla keep $2,500 in exchange for receiving nothing.
Fair enough. One more comment describing my view:
As long as it is a contract one enters under non-shady circumstances, I don't personally consider such deposits particularly unfair or unclassy. In fact, I consider their existence as being rather up-front and clear about such things, much better than some vague damages clause for example. It is a pre-defined price to pay for walking away after a certain point, so by paying that price one gets to walk away without reason from the commitment of buying the car - that's not nothing, that can be valuable some times.
$2,500 is not an outrageous deposit given the size of the purchase overall either. I give my commitment to the purchase and in exchange the seller starts the machinery to make me the car I want. And there is definitely some cost for the seller in redirecting a built car into inventory, though how much varies of course from practically zero to perhaps the car remaining unsold for some time or needing transport across the country or something.
For me the margin on the car is rather irrelevant, my personal choices can not be reasonably demanded to come out of their margin, no matter how big that margin is, unless they did something wrong to warrant this (as in the case of OP I think they did, so should eat the change fee) or if the seller feels it is in their interest to take such things out of their margin. $0 would be of course an even better price for the walk-away option for the customer, and if the seller agrees great. So kudos to those who offer a better price and may it serve them well on the market. I certainly as a customer would prefer a price of $0 instead of $2,500 for the walk-away option...
But I don't personally automatically see non-refundable deposits as shady. They are quite normal in large transactions. As long as the terms are clear beforehand and the amount reasonable, I am OK with them.
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stopcrazypp
Well-Known Member
Validity of damages depends on how far along the car is in production (even before production they can argue it disrupted their parts/production allocation). For orphaned vehicles they get sold as inventory cars, where $2500 in liquidated damages is easily supported (this is not only the value of potential discounts, but also the incurred costs of diverting a car off to inventory and maintaining that inventory if the car is not immediately sold). That someone will eventually buy it is irrelevant, only that there are costs/losses incurred in the process.
The regular dealer situation is a bit different, given the "customer" of the automakers is actually the dealer, and often the end user buys off the lot. They can also have non-refundable deposits too when they desire (for example if they have to do a dealer swap or a order from factory for a configuration they otherwise would not order).
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I agree with you. But the burden of proof is on Tesla to show actual damages of at least $2,500, and even then this may not be enforceable in CA. Tesla's position is more credible after a car is produced. But the nonsense about how 1 week after the order the car becomes non-changeable and non-refundable is just comical (especially for those of us that waited several months to enter the production queue).
Furthermore, if a customer refuses delivery after the car is made, there is likely a justifiable reason - paint defect, poor interior quality, or anything else where any judge or arbiter would basically side with the customer. The only losing argument for the customer would be "I just changed my mind." Anything else will cost Tesla more in legal fees than the $2,500. It would be far smarter for Tesla to simply refund the $2,500.
Therefore, since Tesla's $2,500 non-refundable deposit will not actually let them keep the $2,500 in a majority of cases, this "threat" to the customer should be eliminated. To me, it makes them look like hustlers or thugs.
RogerHScott
Active Member
A little off-topic, but I'm not involved with corporate law so I don't really know how these things work. Wouldn't a company the size of
Tesla either have some of their own lawyers or at least have a law firm on retainer? In which case, does it really cost them all that much
to use these resources which, to them, are basically sunk costs to fight small legal battles? Or are there other significant per-case costs
that they would want to avoid?
Tesla either have some of their own lawyers or at least have a law firm on retainer? In which case, does it really cost them all that much
to use these resources which, to them, are basically sunk costs to fight small legal battles? Or are there other significant per-case costs
that they would want to avoid?
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