"If you want a Tesla, you are forced to sign a contract with an arbitration provision, but there is a way out."
Tesla is not just another car manufacturer. They stand apart because they sell their vehicles – all their vehicles – directly to customers completely foregoing the dealership system. Direct sales means that Tesla and the buyer’s relationship is very much arm’s length. It’s guided by a series of agreements at every stage of the buying process.
One clause requires all Tesla owners who experience problems to bring their claims to arbitration and not the court system.
First, What is Arbitration?
Arbitration is a private process where a third party renders a decision for the parties. The decision is binding and final. Arbitration is like taking the dispute to a private court, with the arbitrator as judge.
Arbitration moves faster than litigation. The process is certainly less rigid and the time and place is dictated by the parties, not by the exigencies of a crammed court docket. That may look attractive but the reality is that final decision cannot be appealed. Also, there is no jury of your peers to hear your story and make the decision as there would be in court.There are other downsides to binding arbitration, not the least of which could be you’re being forced to attend a hearing nowhere near your home.
It goes without saying that the California Lemon Law does not apply in a private arbitration hearing. That is a distinct handicap for every consumer.
The U.S. Senate recently [finally] took note of Tesla’s arbitration policies:
We are incredibly troubled by Tesla’s reported use of forced arbitration clauses in consumer and employee contracts. Such provisions deny consumers their right to bring cases in court and shield Tesla from public scrutiny and accountability. Several recent reports and lawsuits have described a culture of “severe and pervasive harassment” faced by workers at Tesla, and on February 15, the National Highway Traffic Safety Administration (NHTSA) found Tesla’s Full Self-Driving Beta software could “infringe upon local traffics laws or customs” and increase the vehicle’s crash risk . . . We are deeply concerned that the arbitration agreements you impose on your workers and consumers have kept . . . potential safety flaws from the public eye and limited regulatory authorities’
Understand, the Tesla arbitration clause means that you will not be able to file a lawsuit even if you discover dangerous, illegal, or life-threatening issues after you buy or lease - even if the Tesla has a deadly defect or you realize the manufacturer has done something illegal, such as engaging in false advertising. The only choice – if you sign the agreement and do nothing else – is to go to arbitration.
This is not advantageous for the consumer. It certainly is not good for the public, with Tesla matters going to arbitration (private) instead of through the court system (public) there is simply no way for any of us to get accurate statistics concerning Telsa quality issues.
A Possible Solution
Luckily, it’s in the contract that you may opt out of the arbitration clause:
“You may opt out of arbitration within 30 days after signing this Agreement by sending a letter to: Tesla, Inc.; P.O. Box 15430; Fremont, CA 94539-7970, stating your name, Vehicle Identification Number, and intent to opt out of the arbitration provision. If you do not opt out, this agreement to arbitrate overrides any different arbitration agreement between us, including any arbitration agreement in a lease or finance contract.”
While this seems simple, there is a ‘hitch’ – some Tesla customers sign the purchase agreement on-line well before the vehicle is delivered. That means they may not have the VIN, which is necessary (see above) to opt out.
We strongly believe it is in the best interests of the consumer and the public to opt out of Tesla’s arbitration agreement.
Gayle Law Group, Your California Lemon Law Firm
We care about every one of our clients and work hard to get impressive results for them. We are as dependent on our vehicles as any Californian – we know how it feels to have a vehicle that won’t operate the way it should.
We pride ourselves on keeping our clients advised every step of the way. You will never be in the dark wondering what’s happening in your case. You’ll know every step of the way.
Our goal is to get you out of your lemon vehicle so you can get a safe and reliable one as quickly as possible. We know how important it is to you, how you are hamstrung without a reliable vehicle.
Contact
Based in Los Angeles and serving all of California, The Gayle Law Group has successfully represented numerous clients throughout the state over the years. Our experience spans across various vehicle-related cases, including those involving cars, electric and hybrid vehicles, trucks, SUVs, motorcycles, RVs, and more. No matter where you reside in California, we are here to provide the necessary legal support.