
Tesla may call warranty repairs goodwill due to lemon laundering - tempsy
https://insideevs.com/news/433383/tesla-warranty-repairs-goodwill-lemon-laundering/
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notatoad
I'm having a really tough time following this article. what are they actually
alleging here? What is a "goodwill repair"?

~~~
josefx
A "goodwill repair" is a repair where Tesla asserts that it is an issue caused
by the user and not a warranty case. That Tesla is covering the costs of
fixing it is merely a matter of goodwill instead.

The article alleges that Tesla wrongly handles most warranty cases as goodwill
repairs. This hits a lot of possible legal issues.

* They can avoid legislation dealing with chronic defects in cars.

* They can sidestep reporting requirements for road safety issues.

* They can fudge the books when they report repair costs.

* They can avoid labeling cars they had to buy back appropriately.

~~~
jbob2000
I think the intent behind the goodwill repair is important. If Tesla is doing
this intentionally as a legal loophole, then there’s a problem.

But electric cars are new, we’re still understanding some of the problems with
them, and we’re still understanding how people are using them. It’s not
unreasonable for Tesla to have a high rate for these repairs given how unique
their product is.

~~~
hellisothers
The first sentence makes to a of sense but the second one seems unrelated to
any of the discussion.

Let’s say the rate is high because of how unique their product is, how does
that change anything? The repairs should still be recorded correctly (not
goodwill) and laws followed accordingly?

~~~
jbob2000
The lemon laws were written for the combustion engine days, where hundreds of
mechanical components can reasonably add up to an unfixable lemon.

A defunct battery can be swapped. A bad electric motor can be swapped. Sensors
can be changed. These are trivial to do on an electric car.

There’s an incredible labour cost to do this kind of swapping on a combusting
engine. An engine swap? That takes a highly experienced mechanic for an ICU.
Transmission issues are also write offs.

The bar for an electric lemon is much higher.

~~~
ballenf
I really don't understand the logic here. If EVs are so easily repaired,
wouldn't that mean that no EV customer or maker would ever be concerned with
the concept of a lemon car? No manufacturer would need to do any dancing
around the law -- no NDAs, no "goodwill" repairs of warrantied defects, etc.

Personally, I think lemon laws are overall very good for car manufacturers:
they give people a sense of comfort regarding the worst-case scenario in
purchasing a new car. And that's especially important for cars based on new
technologies. But I'd love to see whether there's any empirical support for
this.

~~~
hellisothers
Agreed, and it may be that swapping out a battery or engine is easy but I
don’t want my brand new car in the shop 3-4x a year because my car just
stopped working at the grocery store. Especially when wait times for servicing
can be protracted. It doesn’t matter if the car runs on hopes and dreams, it
needs to be reliable.

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vvanders
Only experience I had with a goodwill repair was way out of warranty for a
non-safety item(stuck exterior door handle) so they definitely aren't limited
to warranty or lemon issues.

~~~
somethingwitty1
staying with the theme of the article, by doing this repair as goodwill, it
changes how they have to report it (if at all). So if there really would need
to be a recall to fix a fault/safety issue with the exterior door handle, the
data wouldn't be there for regulators to make it mandatory. Warranty doesn't
apply in these cases. If a recall defect is discovered 5 years after
warranties expire, the manufacturer is _still_ required to fix it on all cars
impacted. One of my vehicles had a seat belt recall 10 years after. So your
"goodwill" could be just them trying to avoid a costly recall.

Note: this was just staying with the theme of the article and not that I agree
with the accusations.

~~~
cptskippy
Additionally goodwill repairs can be used to cover up engineering defects that
only manifest themselves in limited circumstances to avoid a full recall.

I took an out of warranty Honda Accord in for service at a Dealership and they
discovered a cracked engine block. They performed a goodwill repair under the
auspices that "that shouldn't happen".

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SahAssar
> That doesn't mean Tesla is entitled to follow a similar path just because
> legacy automakers have.

Isn't it sorta weird that companies other than tesla are called "legacy"? I
know that term is almost uniquely bad within software, but considering the
site I'd think they know what connotation it carries for many people.

~~~
smnrchrds
In college admissions, it is certainly positive.

[https://en.wikipedia.org/wiki/Legacy_preferences](https://en.wikipedia.org/wiki/Legacy_preferences)

~~~
SahAssar
Yeah, in almost everything except software it's a positive word. That's why I
included the bit about the software connotation there.

There's a whole separate discussion to be had why the word has so different
meanings too.

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tlb
The notion of a lemon is a car that was made on a bad day, so there are lots
of defects that show up over time. The laws vary but generally say that if a
car needs several major repairs in its first year you can demand a buyback.

The underlying assumption that justifies a category of "lemon" is that needing
N repairs is evidence that it is more likely than other cars of its model year
to need an N+1st repair because failures are not independent.

This may have been true of earlier technology, but it doesn't match the way
modern cars are made. Mainly, the granularity of subassemblies is much higher,
so for example in a Tesla they replace the entire rear powertrain or entire
battery pack as a warranty item.

Lemon laws should have required some periodic statistical adjustment to
determine whether lemoniness actually exists in a given brand or not.

~~~
ytdytvhxgydvhh
What if manufacturing isn’t the source of end-user lemoniness?

These cars go through QC - maybe some QC folks are more slipshod than others,
and the main source of lemons are the ones who were inspected by terrible QC
inspectors?

Or maybe the lemons are perfectly fine cars that were damaged in shipment and
were repaired badly?

Regardless, the lemon laws still protect the consumer.

~~~
cptskippy
Wouldn't sloppy QC also be a signof manufacturing issues?

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sunstone
When you look at Consumer's Reports owner satisfaction scores for Tesla
vehicles they are surprisingly high. In which case there can't be vary many
getting the goodwill lemon treatment, possibly none.

~~~
smt88
NHTSA data is a better indicator. Many owners are 100% satisfied with a
dangerous or buggy car if A) it hasn't killed them yet, and/or B) the
manufacturer makes it easy to replace the lemon.

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bryanlarsen
Another good article about Tesla warranty accounting:
[https://cleantechnica.com/2020/07/10/tesla-tsla-has-a-
warran...](https://cleantechnica.com/2020/07/10/tesla-tsla-has-a-warranty-
accounting-mystery/)

~~~
camjohnson26
That entire article is an appeal to authority and doesn’t address classifying
warranty repairs as goodwill. If the author wasn’t claiming to be working
directly with a warranty accounting expert it would have nothing to say.

~~~
bryanlarsen
The article contains a large number of assertions and numbers derived from
public records. Instead of a middle-brow dismissal, how about you attack
something specific?

The author talked to an expert about a subject that few people understand, and
this is portrayed as a bad thing? I guess it's better to speculate out of thin
air?

Maybe you were an expert on warranty accounting before reading the article so
you didn't learn anything. But I doubt it because if you were you would have
had more concrete criticisms of the article. But even warranty accounting
experts would probably appreciate the author working out the claims capacity
ratios for almost a dozen different companies.

The article is obviously days of work from the author. It may be worthy of
criticism. If so, please do so substantively.

Just a few of things I learned from the article:

\- what warranty accounting is

\- what warranty margins Tesla keeps

\- how that compares to others in the industry

\- what will happen to Tesla's financial statements in the future if Tesla
adjusts their warranty margins closer to their industry peers

P.S. There's lots of good discussion about goodwill in the comments to the
article.

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newacct583
Can someone point me to the spot in the article where they actually allege
that Tesla has resold a lemon buyback on which goodwill repairs were done?

There's a ton of text here, but the actual allegation seems to be completely
unsubstantiated.

~~~
notRobot
Did you read the article in its entirety?

> _" Tesla provides express warranties. Under state lemon laws and the federal
> Magnuson-Moss Act and other provisions of state and federal laws, they are
> required to ensure that they comply with the warranties, or provide a
> refund. It appears they are attempting to evade state lemon laws by claiming
> their so-called 'goodwill' repairs don't count toward the criteria for
> buying back lemons. In addition, Tesla has been requiring lemon owners to
> sign onerous settlement agreements that silence them and make it easier for
> Tesla to engage in lemon laundering: the illegal resale of defective lemon
> vehicles, without branding the titles or taking other steps to protect
> consumers."_

~~~
Supermancho
> It appears they are attempting to evade state lemon laws

"Appears" how? Where is the substantiation? I came away wit the same concern.
I can see the "onerous" terminology in the settlement agreements, which is
standard lawyer CYA in these kinds of disputes.

~~~
hwillis
from the article:
[https://www.reddit.com/r/teslamotors/comments/ct284e/tesla_j...](https://www.reddit.com/r/teslamotors/comments/ct284e/tesla_just_listed_my_buyback_model_3_for_33k/)

The article also noted a former employee is involved in a lawsuit accusing
Tesla of reselling lemons.

~~~
newacct583
But... that link clearly says it was _not_ a lemon buyback! It's not illegal
to voluntarily buy a car back and then resell it. Lemon laws are a very
specific thing, that effectively force a manufacturer to buy the product back.
If it wasn't invoked, then it doesn't apply.

~~~
hwillis
Lemon laws are not a very specific thing, they are wildly different between
states. Not all lemon laws require disclosure, but some states require
disclosure even if a lemon claim isn't actually filed but the car meets the
criteria: [https://www.lemberglaw.com/lemon-law/rights/lemon-
laundering...](https://www.lemberglaw.com/lemon-law/rights/lemon-laundering/)

~~~
newacct583
And I ask again, what exactly is Tesla accused of doing that violates lemon
laws. As I see it, we have two facts:

1\. Tesla sometimes does repairs via "goodwill" accounting instead of standard
warrantee service. On it's face, this sounds like a good thing.

2\. Tesla bought some guys car, then resold it. Again, that's a good thing in
isolation.

And the suggestion is that they did the goodwill thing so that they could scam
the new owner of the car by evading lemon law disclosure. Well, OK. Did they?
Show us the evidence. If there's no actual car that got sold where you can
document these repairs and show they were unresolved... I just don't think
there's much of a case here.

The only way this makes sense is if you start out a priori with an assumption
that Tesla is trying to scam their customers, then try to find a scenario
where they could do it. That works for writing novel plots, it's not much
evidence in an actual court.

~~~
hwillis
> Tesla sometimes does repairs via "goodwill" accounting instead of standard
> warrantee service. On it's face, this sounds like a good thing.

In what way is that possibly good?? At best its a deliberate
mischaracterization that obscures the number of serious manufacturing flaws.
At worst its fraudulent accounting.

> And the suggestion is that they did the goodwill thing so that they could
> scam the new owner of the car by evading lemon law disclosure. Well, OK. Did
> they? Show us the evidence. If there's no actual car that got sold where you
> can document these repairs and show they were unresolved... I just don't
> think there's much of a case here.

I linked two, and theres firsthand testimony from someone who was in the
company. You're just freely making shit up

~~~
perl4ever
>In what way is that possibly good?? At best its a deliberate
mischaracterization that obscures the number of serious manufacturing flaws.
At worst its fraudulent accounting.

At best it's _not_ a deliberate mischaracterization. It depends on the
judgment call of whether the repairs would otherwise be covered under
warranty.

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perl4ever
This is really confusing to use the term "goodwill" here. It's a term of art
in accounting, and despite this story being partly about accounting, it
appears to have nothing to do with accounting goodwill...?

Maybe there is a reason why these repairs relate to accounting goodwill, but
otherwise, I suspect journalistic malpractice.

~~~
b-team
That’s what Tesla calls it. Source: I have had a Model S for many years and
repairs I have had under warranty have been listed as “goodwill.” e.g., Torn
sunroof seal (presumably, due to manufacturing defect).

~~~
perl4ever
I'm sure they do, and the meaning is obvious, it's just that when you get into
the issue of accounting for it, it ought to be clarified that it's not
_accounting_ goodwill.

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osamagirl69
Given all of Tesla's shady business practices, this doesn't surprise me in the
slightest.

Tesla has really made huge progress in modernizing cars (making them electric
and not terrible, getting rid of middlemen, continuous/rolling product
updates, infotainment that is not slow/terrible, etc) I just really wish they
would have focused on the positive parts of the future and left the negatives
behind (remote lockout of features, vendor lockin for service, and generally
trying to screw your customers at every possible turn...)

~~~
bmitc
They also have a history of reverting back to poor worker treatment. I forgot
the statistics, but the accident rate for their workers is quite high. I
recently read an article about the lead safety engineer being told that Elon
Musk doesn't like the color yellow, so that's why they couldn't paint yellow
safety lines on the ground. Just think about that.

~~~
shiftpgdn
Tesla injury rate is now lower than any other US auto manufacturer per their
recent 2020 report.

~~~
bmitc
Are you going from their own blog post? I would be suspicious of any claims by
Tesla. Also, it has been reported that they underreport injuries.

Musk continually pulls the same tactics that Trump does, except that Musk is
applauded for it. The methods are the same: lie, confuse, insult, make grand
claims.

[https://www.businessinsider.com/tesla-factory-injuries-
incom...](https://www.businessinsider.com/tesla-factory-injuries-incomplete-
records-osha-california-2020-3)

[https://www.wsws.org/en/articles/2020/03/07/tesl-m07.html](https://www.wsws.org/en/articles/2020/03/07/tesl-m07.html)

~~~
shiftpgdn
Wouldn't it make sense that all manufacturers are doing the same thing then?
Therefore it just becomes a case of who can juice their numbers best?

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doggydogs94
“... Chrysler also erased computer records that would allow people that
eventually bought these cars to discover they were lemons ...” I am sure that
a system manager had backups (perhaps a tape buried in his desk drawer), no
matter what Chrysler said.

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xfactor973
This article is BS. Every repair I’ve had in the past was marked as a warranty
repair.

