Many former Tesla lessees are less than pleased with the struggling automaker after a new report revealed that an unusual buyout clause in their agreements was not what it seemed.
What's happening?
On Thursday, Reuters published an exclusive report detailing an unfolding lease-related controversy involving Tesla.
Until November, Tesla lessees were not permitted to buy out their leases when the term ended, a policy dating back several years. It was later extended to Model Y leases, making them ineligible for buyouts.
The purported reason for the odd clause was simple — Tesla claimed to need every leased vehicle returned to power a proposed fleet of "robotaxis."
"You don't have the option of buying. We want them back," Tesla CEO Elon Musk said during an April 2019 conference with investors. Musk claimed that by 2020, there would be "over 1 million robotaxis on the road."
The fleet of robotaxis never materialized. According to Reuters, Tesla "found an unusually lucrative way to make money by flipping many of the off-lease cars to new buyers."
The outlet cited four people "familiar with Tesla's retail operations." Those insiders claimed Tesla simply added software upgrades to the off-lease vehicles, which were then sold to "new customers who would pay thousands more than lease-end buyers."
Why is Tesla's lease controversy such a big deal?
Tesla's ongoing public image problems are extremely well documented, and the brand is contending with a series of headwinds.
Tesla sales are faltering, and Musk's actions and statements have diminished Tesla's electric vehicle market dominance. As the most established and well-known brand, Tesla's fortunes could hold sway over the EV market, putting a damper on sales and ultimately amplifying the environmental impact of internal combustion engine vehicles.
Criticism aimed at Musk often spills over to the brand. A recent report suggested Musk's position as Tesla's CEO was in peril, but board member Robyn Denholm quashed the rumor.
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Definitely 👍 Marshall Distel, who leased a Model 3 a couple of years ago, told Reuters: "I love the car, I just don't like what has been going on at the top with the CEO. I don't want to be associated with that anymore."
Reuters' report about Tesla's treatment of its lessees isn't the only controversy surrounding the brand, and it could discourage drivers from making their next car an EV.
What's being done about Tesla's impact on the EV market?
It wasn't all that long ago that Tesla seemed like the be-all in terms of EVs, despite a slow but steady trickle of all-electric options from other automakers over the years.
One upside to the news is that electric vehicle makers could find themselves with a glut of buyers eager to explore options beyond Tesla — and major auto brands like Volkswagen are primed to take advantage of a still-hot EV market.
Ultimately, drivers have more electric vehicle choices than ever before, and up-and-coming brands like BYD are steadily biting into Tesla's market share.
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