Tesla accused of knowingly selling defective vehicles in new lawsuit

Photo by Amelia Holowaty Krales / The Verge
If you buy something from a Verge link, Vox Media may earn a commission. See our ethics statement.

A former Tesla employee claims the company knowingly sold defective cars, often referred to as “lemons,” and that he was demoted and eventually fired after reporting the practice to his superiors. He made these allegations in a lawsuit filed in late January in New Jersey Superior Court under the Conscientious Employee Protection Act (CEPA).

The former employee, Adam Williams, worked for Tesla as a regional manager in New Jersey dating back to late 2011. While there, he says he watched the company fail “to disclose to consumers high-dollar, pre-delivery damage repairs” before delivering its vehicles, according to the complaint. Instead, he says the company sold these cars as “used,” or labeled as “demo/loaner” vehicles.

“There’s no merit to this lawsuit. Mr. Williams’ description of how Tesla sells used or loaner vehicles is totally false and not how we do things at Tesla,” a representative for the company said in response to the lawsuit. “It’s also at odds with the fact that we rank highest in customer satisfaction of any car brand, with more owners saying they’d buy a Tesla again than any other manufacturer. Mr. Williams was terminated at Tesla for performance reasons, not for any other reason.” The lawyer for the plaintiff could not be reached in time for publish.

Williams says in the court filing that he reported this behavior in late 2016 and early 2017 to his supervisor, as well as Lenny Peake, Tesla’s East Coast Regional Manager, and Jerome Guillen, a company vice president. Shortly after that, he claims, he was demoted to service manager of the Springfield, New Jersey Tesla store. He then says he was demoted again later in the year to a “mobile manager” position and was ultimately fired in September 2017.

In the lawsuit, Williams argues that he was terminated for reporting the alleged lawbreaking practices, and he should therefore be covered by CEPA’s whistleblower protection. CEPA is a so-called “whistleblower act” in New Jersey that was put in place to stop employers from retaliating against employees who report, object to, or refuse to participate in what they view as illegal behavior.

This is not the first time Tesla has dealt with a lawsuit that involved accusations of lemon law issues. The company settled a lawsuit with a Model X owner in 2016 who complained about problems with the doors and software of his vehicle.

Willams vs Tesla by Anonymous ohKLS5K on Scribd


Not surprising. Did y’all forget that this company (and SpaceX) was funded by the "PayPal Mafia"?

Thanks for your insight. I always suspected my new Falcon 9 was previously damaged and had misaligned panels. Screw you SpaceX, funded with mafia money.

No problem. Just don’t hold your breath, you know, your Falcon 9 will be delayed in shipping, just like their launch and Model 3

Dang. Well, that’s it – everyone close up shop, we’ve got to concern ourselves with delayed production on a multi-million dollar vehicle to get us to outer space!

Tell your boss to hurry that electric Ford Truck, Tesla beat your asses to a pulp, and they just started.

so…if a new Tesla was damaged pre-delivery, they would send a different new Tesla to that buyer and the damaged car would be repaired and then marked as either "used" or as a "demo/loaner" car? That sounds pretty okay to me…what exactly was illegal?

Apparently, semantics…

It’s technically not "Used" because it had no previous owner, and if it didn’t get used as a loaner or demo vehicle prior to sale then while he is "technically" right, I don’t see what the BFD was.

Fair enough — if I buy a vehicle for several tens of thousands of dollars, I too would like to know the history of the vehicle and expect them to be straightforward. However, I’m also not a person who scoffs at refurbished items either. Calling these "lemons" is a big stretch.

"what exactly was illegal?"
Depends on the state. Many (all?) states have disclosure requirements. Tesla may be required to disclose that the cars were damaged prior to sale. I have bought used cars in Jersey and I got a disclosure form indicating the dealer did not know of any accidents with the vehicle.

Ehm depends on what was broken? Do you want a car with malfunctioning brakes sold as used? Just think it through

But they were repaired. Much like in a recall.

How dare you question the moral integrity of our demigod, Elon? /s

I was waiting for someone to not be so nice when they get a 150k car with misaligned door panels. Though at this point, every reviewer mentions the misaligned body panels. It’s almost common knowledge.

Tesla: Leaks like a 70’s Dodge sunroof. The body gaps of a 90’s Saturn.

Whenever there are videos of owners mentioning these issues they always say after "now don’t get me wrong, I know I’m being nitpicky and I still love Tesla". Like they need to be absolved of their sin of mentioning quality control flaws in a $150,000 car.

A few years back I read that sometimes cars can be damaged in ports after getting shipped to the US from foreign countries. As long as the damage is under 3-6% of the MSRP, it does not have to be reported and the car can still be sold as new.

If some of these cars were purchased back from customers and then re-sold, he may have a case on his hands but he’d have to be able to show VIN numbers and track down those customers.

Depends on the state. States have disclosure laws, that may vary.

His being demoted multiple times before being fired certainly doesn’t make his case stronger in these sorts of cases. Just makes him look like he’s trying to cash out because he’s bitter about how he was pushed out.

Of course, if he has evidence that he really was being silenced and that Tesla was doing what he said they were doing, then I’d be proven wrong. Until then, I suppose we all just sit back and wait.

That’s the mess of it eh?
If you’re a whistleblower, you’re more likely to be demoted, or at least have passive aggressive measures taken against you.

Either way, I’m not sure any ‘jury of his peers’ is even equipped to adequately judge him, especially given how much fanboys (like myself) hail Mr. Musk’s vision.

Cantaloupe = Musk melon

Tesla = Musk lemon

You’d think people would be more upset about being charged now for an level 5 self driving features that Tesla (or anyone) don’t even know if possible, or claiming their cars "have all the hardware for self driving" when it just has a DrivePX2 and no lidar.

If people can cut Tesla slack for false advertising and selling non-existent products, what’s a small lie about the car being used?

I would never pay them for that, and don’t see that situation ending on a positive note.

Tesla owners don’t care since they all suffer from the stockholm syndrome. Their love for Elon grows stronger with every problem their $100k car has. Their fearless leader is saving the world after all, one millionaire greenwasher at a time, so he deserves a break.

I don’t want to defend Tesla but a lot (probably vast majority) of manufacturers and dealers go a step further.
You buy a car and lets say it’s damaged during the predelivery. Scratches and dents happen. A lot. Instead of letting you know and ofering you a different car they sent it to the bodyshop for a repair and you receive a brand new, shiny, car. Or at least you thought so. You would be surprised what you can find on some new cars with a coating thickness gauge.

Seems like Tesla is going above and beyond… Explain to me how a car that has never been owned prior or driven more then XXX miles is not new?

Should Tesla just CRUSH any car that comes off the assembly line that isn’t 100%? Its not like they are shipping cars that are still faulty, they are correcting issues and then marking down the car.

Go ahead and point to "high dollar" but seriously we are talking about a Tesla, if they test that battery bank, computer, cameras, motor, or any electrical component it will be a high dollar repair that is simply swamping of components…

We don’t know what was broken in these cars. Maybe the brakes didn’t work. We have no idea.

View All Comments
Back to top ↑