Car Buyers Claim Tesla Unilaterally Alters Contracts, Raises Prices

A complaint filed on Tuesday in federal court in San Francisco, California contends that electric vehicle manufacturer Tesla forces some customers to accept modified and less favorable terms in custom car sales contracts, like increased prices for the same or a lesser base model vehicle or increased prices for features, such as autopilot.

The complaint explains that Tesla is vertically integrated, meaning unlike most car makers, it sells cars to consumers directly rather than through dealerships. The company purportedly offers only four base models that can be equipped with a variety of options and upgrades. “Thus, Tesla can plan its manufacturing, the features of each individual vehicle and when and if certain features or ‘options’ will be available to each individual who orders their car,” the filing says.

Customers reportedly order cars through its website, first by filling out an interest form with a $100 fee, then by agreeing to a Motor Vehicle Order Agreement (MVOA) which contains terms and conditions, states that the order is made electronically, and contains a total price exclusive of taxes and governmental fees. Consumers like the plaintiff allegedly rely on the price set forth in the MVOA. 

However, the filing claims that Tesla pulls a bait and switch: it unilaterally changes the terms of the contract claiming that the model or features ordered are no longer available. The complaint says this is disingenuous because Tesla knows, by virtue of its business model, when customers order a vehicle exactly which options are available. Through this conduct Tesla allegedly ups the price it charges consumers “unilaterally and fraudulently.”

The lawsuit seeks to certify a nationwide class and a California subclass of car purchasers who entered into a MVOA and received a subsequent agreement containing a higher price and/or a “different configuration of options for essentially the same or lesser vehicle or for an altered vehicle configurations when the original configuration was available.”

The complaint states claims for breach of contract, unfair business practices, and under the California Consumer Legal Remedies Act. The lawsuit seeks to enforce the buyers’ contracts with Tesla for the originally agreed-upon configuration and price in addition to damages and injunctive relief.The plaintiff and putative class are represented by O’Connor Law Group P.C., Wirtz Law APC, and RealLaw APC.