Tesla Lemon Lawsuit, Direct Sales and The Bottom Line

Tesla is one of the innovative companies in the world and THE most innovative company in the automotive industry. The company’s unique approach to bringing the latest in technology to the consumers around the world has been met with encouragement and enthusiasm but was not without envy and retaliation. The latest Tesla lemon lawsuit is most likely to be a prime example of a PR-hungry attorney and an engine-tampering consumer. In addition, some people have jumped on the bandwagon and brought up the issue of Tesla direct sales model.

Before you read any of those anti-Tesla propaganda you should first think about the business model in the industry. How does the money flow? Why do people say what they say? Here is what our research led to!

The Lemon Law Case

The latest case against Tesla comes from Wisconsin. It appears that the highly computerized Tesla owned by the Plaintiff failed to record the problems claimed by him. Further, reportedly Tesla has evidence that the hood of the car was opened before every “fuse failure”. Finally, after Tesla service center applied tamper-proof tape to certain parts of the engine, the vehicle stopped having problems.

To get some expert feedback about the case we contacted an automotive consumer class action attorney and presented him with the information provided by the Plaintiff and Tesla. Hovanes Margarian represented the consumer in major class action cases against companies like BMW and Audi. After a 1o minute conversation, Mr. Margarian made it clear that his law firm would most likely not take a case like this pointing to the potential ethical issues related to the facts presented.

As we understand some attorneys do a great job in seeking out “cases” with high PR value. In addition, there are some Plaintiffs who are chronic “lemon owners”. From Mr. Margarian’s prospective Teslas on the market are surprisingly well designed with very few problems. “When problems arise, the company CEO Elon Musk himself is known to even make phone calls to the owners and resolve any issues in a reasonable and prompt manner”. (This made me think about the Toyota’s intentional denial of the sudden acceleration problem that leads to a huge settlement in addition to millions in fines paid by Toyota). 

Direct Sales Model

Do you know ANYONE that likes going to an automotive dealership, sitting there for hours, being hassled and nickel-and-dimed by a bunch of salesmen? This is my strong opinion about car dealerships in general: they are old-school and sad relics of the past – they need to go away! Car dealerships are one of very few businesses who successfully violate the commerce law that prevents a sale of a commodity at different prices to consumers based on heavy discrimination practices.

The lemon law, federal or state, have nothing to do with the manufacturer’s sales channel. Bringing up Tesla’s direct sales model in a lemon law related case as an issue raises a red flag. Either the attorney is inexperienced and lacks knowledge of the law or has some special interest influences. The lemon law protects the consumers from defective products. The middle-man, the auto dealerships have nothing to do with the lemon law. When you file a lemon law lawsuit, the case is against the manufacturer and not the reseller. The warranty on your vehicle is provided by the manufacturer. Every time you take your car to the service department, the dealership gets paid by the manufacturer.

So all those special interests, from unnecessary car dealerships, car dealership unions and associations, are financially hit when an innovative company like Tesla invests in great technology and brings the technology to the market at affordable prices.

So it looks like:

  • all of the consumer rights are still intact and protected when Tesla implements direct sales model
  • attorneys and consumers should consider their reputation and ethics before filing a claim
  • automotive industry and special interests have to think about innovation in stead of attacking Tesla


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