Would-be Tesla buyers say deposit refunds take months
Tamara Tanney got tired of waiting for a new Tesla, so she asked for a refund of her $1,000 deposit. It’s been a year since the Toronto-based digital strategist canceled her fully refundable order, and the money still hasn’t shown up in the financial statements she regularly checks.
“If this is the service you get as a new client, I can’t imagine the kind of service you would get as a current customer,” said Tanney, 23, who is no longer interested in owning a Tesla.
Seventeen people interviewed for this story described months of effort to get Tesla Inc. to refund their deposits. The timing of their experiences overlapped with a chaotic period for the company, which initially struggled to mass-produce cars, then broke through to more than triple deliveries of its electric vehicles last year.
Despite all its progress in 2018, Tesla finished the year with almost $800 million in customer deposits on its books. Legions of would-be customers are still waiting on cheaper Model 3 sedans and a Solar Roof product Chief Executive Officer Elon Musk hyped more than two years ago.
A Tesla spokeswoman said anytime the company gets a refund request, it works to process it as quickly as it can. She declined to say how many refunds the electric-car maker has been processing or how long it’s taking on average to resolve requests.
Musk, 47, called improving service in North America the “No. 1” priority for this year during a Jan. 30 earnings call. He didn’t specifically speak about deposit-holder repayments.
Tesla doesn’t break down how much of the customer deposits on its balance sheet are for its vehicles or for energy products including the Solar Roof. It took in hundreds of millions of dollars in 2016 for the Model 3, a car Musk said would be sold at a starting price of $35,000. Three years later, the cheapest version of the sedan available is $42,900.
Customer deposits are categorized as liabilities on Tesla’s balance sheet, meaning it’s effectively served as an interest-free form of borrowing.
“Similar to using launches of a car two or three years before it actually hits the road, and using that as a source of crowd funding, they’ve done that with deposits,” said Jeffrey Osborne, an analyst at Cowen & Co. who has the equivalent of a sell rating on Tesla.
Some of Tesla’s customers who complained in interviews about how long it took for the company to grant a refund did eventually receive their money back. Raj Armani, a 40-year-old internet entrepreneur, said he waited 183 days to recoup a deposit he initially made in April 2016.
“It was so hard to get an answer or a status,” said Armani, who asked for his deposit back in August. “They always say they’ll get back to you but never do.” He received an express-mailed check for the full amount in February.
Would-be customers described a process involving unanswered calls and emails to Tesla customer-service representatives. Rich Zeoli, a talk-radio show host in Philadelphia, said he called, emailed and tweeted at the company for information about the status of a refund for six months before finally disputing the charge with PayPal.
“Tesla just stopped communicating with me altogether,” Zeoli said.
Gautam Pasupuleti, 43, an architecture manager at a regional bank in Lancaster, Pennsylvania, and a Tesla shareholder, said it took him more than six months to get a $1,000 deposit back for his roof pre-order placed in 2017.
“I am disappointed by the service, and frankly, that’s the part that scares me from buying a Tesla myself,” Pasupuleti said.