Danny Roman bought a new Tesla Model X and took delivery of the car on Feb. 28, 2020.
Three days later, he informed the company he was returning the electric SUV under the seven-day, no-questions-asked policy Tesla CEO Elon Musk was touting at that time.
Today, more than two years since Tesla took possession of the car, Roman still doesn’t have his refund or access to the vehicle, which had a price tag around $116,000 overall, including various options and fees.
Records indicate that Tesla did pick up his Model X, loading it onto a tow truck on March 8, 2020, after which he expected his refund to arrive promptly. His bank advised him to ask the EV maker to initiate a “stop sale,” he recalls, and then his Tesla sales representative informed him that his refund would be processed soon.
Instead, several weeks later, as he was still corresponding with Tesla about the status of his return, Roman received a service alert from Tesla telling him to come pick up the electric SUV. The alert explained that it had been repaired and was in a service center in Burbank, California, although he had originally purchased the vehicle in Century City, about a 40-minute drive away.
Roman told CNBC he was astounded by the service alert. He says he never asked for nor authorized any repairs and that Tesla has previously acknowledged he was returning the car. (Correspondence between Roman and Tesla, which he shared with CNBC, confirms his account.)
Roman stopped making payments on the car for a month because he thought everything was moving along properly. Then the bank told him that he had missed a payment and that his credit rating had taken a 30-point hit. When he called to ask about it, he was told Tesla had not issued the stop-sale.
As the owner of a small business that gives biking and hiking tours in Southern California, Roman says he needed to maintain a strong credit rating. So given Tesla’s stubborn stance on the Model X, he decided he had no choice but to keeping making car payments to his bank and to pay to keep the car insured.
Roman wanted to avoid any repossession by his bank, and knew the financial institution could have wrecked his credit if he didn’t keep up the payments. He kept up the insurance payments in case damage happened to the vehicle while it was in Tesla’s possession.
“If you stop paying your bank, that will destroy you!” Roman said.
As a result, for the last two years, Roman has been making payments on a car that he does not possess.
Tesla did not respond to a request for comment on their customer’s predicament.
Why he returned the car
Roman says he bought the car because he was a fan of Tesla, read that the Model X had a great safety rating, and believed driving a battery electric vehicle would minimize the environmental footprint of his personal transportation.
As the father of an infant at that time, he was very concerned with safety. And as the owner of a sustainable outdoor adventure company, he felt that buying a battery-powered electric car was a good way to underscore that commitment.
The car was marketed with a battery that had more than a 400-mile range, essential for driving from Southern California to the San Francisco Bay Area and points along the way where he often travels and sometimes leads biking tours.
When he first took the Tesla Model X out, the vehicle’s range indicator said that Roman had drained 15 miles from the battery after he had driven less than a half-mile from his home.
When he tried to recharge the vehicle’s high-voltage battery on the first day that he had the car, traveling to a Tesla Supercharging station in Culver City, Roman said it took far longer than sales reps had promised it would — hours, not 45 minutes — to charge to or past 80% of the battery’s full range.
Roman shared photos with CNBC of the vehicle’s display and charging status from that trip. Even before the time he spent plugged in at a charging station, Roman said, he had already waited more than an hour to get access to a stall, because there was a huge line of cars in front of him.
“This is L.A. Everybody has a Tesla.”
Besides the battery issues, Roman said one of the vehicle’s falcon wing doors was sticking when he tried to open it. And he found that installing a charger at his apartment complex would cost 10 times the amount that Tesla sales reps claimed it would. The sales reps said he could install a charger at home for about $700; they knew he lived in an apartment building, but instead quoted a price for a charger in a stand-alone garage.
In the spring of 2019, Elon Musk said to his millions of followers on Twitter: “To be clear, orders are fully refundable, even after you’ve had your Tesla for a week,” and “If someone really wants to return the car in good faith on day 8, that’s fine.”
So Roman returned his car.
At one point, messages to Roman from Tesla show the company tried to convince him that it didn’t have a seven-day return policy when he bought his vehicle.
But Tesla had the return policy on its web site until Oct. 2020 — months after he bought and returned the Model X. (The return policy was also mentioned in his sales contract.) After three months of back and forth with the company, including being told his refund was arriving soon, then being told he could pick it up for repair, Roman filed suit against the company.
To his surprise, instead of being able to proceed in court, he was informed his case would be sent into an alternative dispute resolution process.
When he signed paperwork in order to take delivery of his Model X, Roman had agreed to an arbitration clause.
No day in court
Roman’s predicament regarding the Tesla Model X highlights the vulnerability of U.S. consumers who are pushed into arbitration agreements in order to purchase services or items as a matter of course.
Mandatory arbitration is common in new and used auto sales, says Paul Bland, executive director at Public Justice, a consumer advocacy group.
For all practical purposes, consumers get nothing out of agreeing to arbitrate, he says. For companies, however, “Their motivation is to cap liability, and to make it harder for a consumer to win an individual case if they did something illegal,” Bland said. “It is such a secretive system that it’s much harder for consumers to find out what happened to people in previous related cases, and makes it much harder for there to be a class action.”
Roman says if he realized the company was not being honest with him about the car and return process upfront, he would not have purchased the Model X and would not have agreed to arbitration. His arbitration is still pending.
Meanwhile, Roman had to lease another car to use in place of the Model X. He told CNBC he is leasing a hybrid electric Toyota Prius.
“Every time the money gets sucked out of my account, every month, I just cringe,” said Roman. “Besides that, I have spent over a hundred hours of my life trying to fix this, and just worrying.”
In February of this year, Tesla — still refusing to acknowledge they’d accepted his vehicle as a return — sent Roman a message telling him his car, which he hadn’t seen in about two years, was ready to be picked up at a service center.
Bemused, Roman emailed them and said he’d come pick it up. But then Tesla wouldn’t make an appointment for him to do so. They told him to call his bank instead. That didn’t get him anywhere.
Livid, and curious about what had happened to the Model X over time, Roman logged in to the Tesla app to see if he could learn anything about its whereabouts. It turned out the car he’d paid for was sitting in a salvage yard just 11 miles from his home.
“After everything I’ve been put through, I am still a huge believer in Tesla, Elon Musk and electric cars,” Roman told CNBC. ”I hope my story reaches the powers that be at Tesla and they make necessary changes so this does not happen to their future clients.”