Elon Musk tweets lenient return policy, but may not be upheld

In his tweets, Musk emphasized that “orders are fully refundable.”

Tesla is now accepting $2,500 “pre-order payments” for the Model Y SUV, which it says it will start manufacturing next year.

However, the company’s “Model Y Motor Vehicle Pre-Order Agreement” contains no provision for people who show up to get their cars, and don’t like what Tesla presents to them — for example, a Model Y with too many miles on the odometer, smaller-than-anticipated seats, chipped paint or a cracked windshield.

Additionally, history suggests that when customers refuse to take delivery of a Tesla they ordered, they may not get their pre-order payment refunded.

In Tesla forums online, customers have traded notes and complained about its refund policy. Several say they haven’t gotten their money refunded for “deposits.” (Tesla previously referred to “pre-order payments” as “deposits” when it was preparing to deliver earlier model vehicles, including the Model 3 electric sedan and its first SUV, the Model X.)

Others have sued Tesla to get their deposits back after rejecting delivery.

A one-time Tesla fan, William Carrol, shared records with CNBC that show he ordered a Model X in 2016, placing a $5,000 deposit down before the all-electric SUV was available for him to test-drive it in any nearby showroom.

He said, “I had never seen a Model X. When the vehicle arrived at the [Tesla store] I decided that it was not large enough for my family and so I decided against the purchase,” he said. “I asked for a refund but was told that they would not issue a refund. I will never do business with Tesla again and am still furious about it today.”

Given this ambiguity, CNBC asked Tesla: If a customer meets up with Tesla to take delivery of their Model Y, but does not want to pay for and take possession of the car because they’ve identified some flaws with it, do they get their pre-order payment of $2,500 back?

A Tesla spokesperson emphasized that the pre-order deposit is applied toward the purchase price of the Model Y, and is “fully refundable” until the customer takes delivery. After that, the customer may return the car under Tesla’s returns policy and seek to get their payment back. However, as CNBC has previously reported, the process of getting a refund after returning a car is not always smooth or speedy.

A quick review of Model 3 FAQ page finds:

“Please note that after receiving a Vehicle Identification Number (VIN), you will not be eligible to receive a refund for your order deposit.”

The “order deposit” is what Tesla is now calling a “pre-order payment.” So, based on the Model 3 language, it’s not always “fully refundable.”

Customers seem to be confused about the policy, as shown by this recent tweet to Musk from a prospective Model Y customer:

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