From 2019 to the end of 2024, Tesla had a very strange policy in place saying that customers who leased their vehicles weren’t allowed to buy them at the end. They had to return the cars to Tesla. CEO Elon Musk said the purpose of this was to use the previously leased vehicles as part of Tesla’s “robotaxi” network. That obviously didn’t happen.
As it turned out, Tesla instead flipped the used Model 3s that it forced lessees to return. It makes sense from a business perspective. I mean, Tesla has yet to get around to building a feasible robotaxi despite Musk’s best efforts (read: lies). The Austin, Texas-based automaker wasn’t just going to sit on a cache of vehicles that were quickly losing money. That’s why it decided to break its promise and sell the cars for far more money than lease-end buyers would have paid.
It started as a program that only impacted the Model 3, but it quickly grew to every model the company made until the program was canceled a few months back.
If you’re thinking that’s a really scummy thing to do, you’d be right, but it does seem to be legal and helped keep the lie about robotaxis alive and well. From Reuters:
The practice was an easy way to “jack up the price” of the used vehicles, said one of the people, who asked not to be identified.
[…]
[T]he tactic appears to have been legal. Still, the practice denied lessees the industry-standard option of buying their vehicles and misled them for years about why.
It also perpetuated the myth among investors that Tesla was near fully autonomous driving technology. That belief has helped buoy Tesla stock, whose value has far outpaced current earnings and made it the world’s most valuable automaker.
Since 2019, Tesla has leased over 314,000 vehicles worldwide — accounting for 4.4% of all deliveries. That is a lot of Model 3s and customers being taken advantage of for the cardinal sin of trusting Elon Musk.
Here’s what Tesla would do to the cars it took back on leases to jack up prices for the next buyer:
In making upgrades to its off-lease vehicles, the people familiar with Tesla’s retail operations told Reuters, the company often added “Full Self-Driving” software, which it has sold separately for up to $15,000 and now sells for $8,000. It also added “acceleration boost,” an update that can make the car speed up faster, which it sells separately for $2,000.
This move has obviously left a bad taste in some customers’ mouths.
At the start and end of his three-year Model Y lease, Joe Mendenhall told Reuters, Tesla staff said they needed the car back for the robotaxi fleet. But last year he learned Tesla sold the car once he returned it.
“Lies about not being able to buy out my lease,” the Indianapolis marketing entrepreneur wrote on X. “The car gets sold at auction, not turned into a robotaxi like I was told. Slow clap @elonmusk.”
Will this latest revolution have any bearing on what happens to Musk and Tesla in the future? Probably not, but it’s at least in keeping with Musk’s villain arc.
