Saturday, October 23, 2021
News Tesla May Avoid Buyback By Using Lemon Laundering

Tesla May Avoid Buyback By Using Lemon Laundering

Lemon laundering is a practice by which an automaker avoids labelling a vehicle a lemon, and some believe Tesla is doing it

  • Goodwill repairs made by Tesla could be a way for the automaker to avoid lemon laws, lawyers say.

Lawyers and consumer protection organizations are worried Tesla may be using the practice of lemon laundering to hide defective vehicles from the public.

InsideEVs spoke with different sources including Bernard Brown, an expert in consumer law about Tesla labelling warranty repairs goodwill so they don’t go into the books against revenue.

To sum it up, when an automaker labels a warranty repair as goodwill, the expense doesn’t go into the cost of revenue and therefore doesn’t impact profit. Goodwill is usually labeled as an asset in the financial statements while the cost of warranty repairs are an expense.

As for the term lemon laundering, it’s essentially a way to hide the fact that a vehicle is a lemon. Again according to InsideEVs, many automakers such as GM and Chrysler were caught doing it in the past, but now Tesla may be using the same strategy.

Lemon laws apply when a vehicle doesn’t perform to the standards set in a given state or country. Usually, there’s a number of repairs that need to happen to a vehicle before it can be deemed a lemon. Once that happens, the automaker is usually forced to buy the vehicle back from the client.

By not booking warranty repairs where they need to go, it’s difficult to determine if a given vehicle is a lemon or not.

The financial statement manipulation is the basis for numerous short selling strategies on Tesla stock, although these strategies have not panned out in recent months.

Tesla has had numerous quality problems on its vehicles since launch, and it continues to this day with the Tesla Model 3. We invite you to check out the full article on InsideEVs. It’s in-depth and gives you options if you believe you may be a victim of lemon laundering.

Trending Now

The 2022 Honda Passport will Compete in Rally Racing Events in the United States

The rally version will be a lightly modified road going model It will compete in events held by the American Rally Association Honda wants...

Tesla to Increase its Supercharger Network by 300% in Two Years

Charger congestion in some areas has become an issue. There are currently nearly 29,500 superchargers globally. Tesla will soon allow other EVs access...

GMC Hummer EV is Entering Pre-Production

Pre-Production has begun and regular production is expected by the end of the year The Hummer EV will be made in GM’s Factory...

Tesla FSD : It is Still Far From Perfect

Tesla opened the Beta test to many owners recently A video shows a Tesla struggling to drive trough Detroit FSD seems to be...

Kia EV6 Order Books Open at Noon Today for Canadians

The required deposit is $500. Pricing has not yet been announced. Only 200 units will be available for pre-sale. Kia’s all-new EV6 electric vehicle...
Charles Jolicoeur
Charles Jolicoeur was studying to be a CPA when he decided to drop everything and launch a car website in 2012. Don't ask. The journey has been an interesting one, but today he has co-founded and manages 8 websites including and as General Manager of NetMedia360. He also sits on the board of the Automotive Journalists Association of Canada. Send me an email


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.