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Ethical Question

Ethical Question

I was wondering if there is a mechanism that would prevent Tesla from rolling back certain options when someone trades in their vehicle for a new one. For example autonomous driving feature. Someone who bought the vehicle originally optioned the vehicle with autonomous driving but has decided to trade it in for a different model. Is there a mechanism that would prevent Tesla from 'removing' it and charging the new owner to reactivate it despite being previously paid for? The same can apply to ludicrous mode and even battery pack from 75 kWh to 60 kWh. While the price of a Tesla would be cheaper the less optioned it is, the reactivation of the same option would be at full+ price therefore allowing Tesla to potentially make more money on the same vehicle/option later on in the vehicles lifetime. Just wondering.

Kosta | 20 août 2016

Can anyone answer this for me?

mntlvr23 | 20 août 2016

I don't have any inside information on this, but I would imagine that there is no mechanism preventing Tesla from doing this. EacH of these options has a value and Tesla would now own the car and could sell it optioned up for more or optioned down for less. The market rules. No ethics involved.

Jeff Hudson | 20 août 2016

+1 mntlvr23 and well stated I might add.

up north | 20 août 2016

To be honest high resale value. To not be honest and get caught you will bury yourself.

Efontana | 20 août 2016

Direct sales between individuals.

The ability to adjust the value of the vehicle to match market dynamics is probably a good thing. Once Tesla owns it they can parts it out if they want.

fgaliegue | 20 août 2016

How is that ethics at all? I fail to understand...

johndoe | 20 août 2016

@fgaliegue
Ethics don't come into it, it will be the terms under which the feature was sold.
If the activation was for the owner only, then they can do this, and other companies already do a similar thing.
If the activation was for the car, then they cannot.

codyb12889 | 20 août 2016

Them being able to deactivate it and charge for it again is something I have thought about as well. Here is my opinion on the whole thing but proceed with caution as it is rife with speculation.

Any owner trading the car in is going to want a higher value for having auto pilot paid for, if they can not get this they will sell it to a private buyer to recover more of their initial payment.

By adding a premium on top of that possible trade in value to reactivate those features you push the cost of pre-owned cars higher and in turn end up with people more willing to sell personally at a slightly lower price than the new higher price to recover more of their initial payment.

Essentially Tesla would end up getting cut out of the pre-owned business on their vehicles. On the plus side that artificial inflation of the pre-owned market would in theory help support new car sales. All in all this becomes a bit of a Pandora's Box.

They already have the great potential for future revenue on many of the cars on the road without hurting them self in that way. If someone buys a MS60 now and does not upgrade then when they sell it at a depreciated price to another buyer later that person can still pay the fee to convert it to a MS75. The same principle applies on AP and any other features that can be unlocked OTA.

carlk | 20 août 2016

It's a very strange question. Why would Tesla want to do that?

Dwdnjck@ca | 20 août 2016

Can tesla do it? yes. Will they? Not likely

JeffreyR | 20 août 2016

Think of it another way. What happens when the next big battery increase occurs? If Tesla has a bunch of MS-60s they can turn into MS-75s w/o spending any extra money those CPO cars will be worth more. If they are trying to increase the addressable market they can pull features to make the car cheaper. I think they would want to keep used values as high as possible though.

brando | 21 août 2016

As a buyer, you decide what you want and what you'll pay.
Don't get side tracked with what if...
Decide what you want, if the price seems fair...if it doesn't seem fair, look elsewhere.
Almost 100,000,000 new cars made each year, you have plenty to choose from.

https://en.wikipediaDOTorg/wiki/List_of_automobile_manufacturers

This particular list may not be complete, but not a bad starting place for Battery Electric Vehicles.
(many may not be available in your town)

https://en.wikipediaDOTorg/wiki/List_of_production_battery_electric_vehi...

Dithermaster | 21 août 2016

They did the reverse; many cars that were not Supercharger enabled were sold as CPO cars with Supercharging enabled (every CPO is).

kaffine | 21 août 2016

I think it would be a nice option if they allowed you to turn off features of CPO cars to reduce the price. Say lower the price by what the option cost as a factory option or a bit less as it is used. Then if you decide later you want that option again you have to pay the current price to reactivate it. I know there are a lot of people out there that wont use AP functions so let them disable the AP on a CPO.

Kosta | 21 août 2016

I think there is some confusion her so I will try and elaborate. When you buy a new Model S the cost of autopilot is $2500. After 5 years there may be a depreciation of 50% on the entire vehicle. This means at time of trade in you get $1250 back from your investment in autopilot. If Tesla deactivates the feature afterwards they can sell the feature to the new owner for $3000. This is something Tesla can do repeatedly making more and more money of the same existing feature. If this were to be done it would be unethical of the company towards its customers. Is there anything that prevents Tesla or any other company from doing this?

johndoe | 21 août 2016

It depends on whether the activation was for the vehicle or the owner.
There is nothing unethical if the activation was for the owner who paid the fee.
It is illegal if it was for the vehicle.

Kosta | 21 août 2016

Charging $3000 for a used component that was paid for by the previous owner is unethical.

mntlvr23 | 21 août 2016

The market is the only thing that would prevent Tesla from doing this. Once Tesla rebuys the car, they can try to do whatever they would like. You would have made a deal with them that you felt was fair to you and that they were happy with. They can then try to sell it for 10% more than they re-bought it for - or they could try to sell it for 50% more than what they re-bought it for. They can break out the AP price, or they can package it up in the price, or they could disable the convenience part of the feature. No ethics involved.

That said - If they broke out the price of AP as a line item option, they would not likely be able to resell the feature for $3000. If $3000 is the perceived value on a new car (where the first buyer might expect to use it for a dozen+ years) - this same price (if broken out as a line item) would not be as desirable for a five year old car, or a ten year old car - where the car has less useful life remaining. But then again, if they find a buyer who will pay the $3K, more power to them .... The bottom line is that Tesla can do whatever they would like with their car.

Peter Gregory | 21 août 2016

Why would any company expose themselves to a black eye like this? Eventually they would be found out, and the loss of trust would be a heavy blow on the business.

kaffine | 21 août 2016

Other than to avoid bad press and lawsuits there is nothing really in place to keep Tesla from doing that. Depending on what all is in the agreement that no one reads they would likely be breaking some law. Since Tesla doesn't know what was a selling feature between a private seller and a private buyer they would not know if that feature was one the new owner knew the car had and expects it to still have when he takes possession of the car. Then there isn't anything to prevent them from turning AP off on all cars either for that matter. They could switch it to a subscription service if they wanted. You have to pay $x per year to keep the options turned on. I doubt they would attempt that setup but there is nothing to stop them if they decide that is a better business model.

Since it is very easy for someone to find out what all options the car has enabled it would be stupid for Tesla to try and disable features when the learn the car changed owners. As the new owner has likely had the car for a week or more before Tesla finds out so the new owner is likely aware of what features were enabled.

Kosta | 21 août 2016

How can someone find out what options were enabled/paid for by the previous owner? If someone deactivates a feature that has been paid for previously, how can the new owner find out? I am strictly talking about a vehicle that was traded into a Tesla 'dealership' for another Tesla vehicle. Please keep in mind my question does not only apply to Autopilot, but also Ludicrous mode and in the case of the base Tesla to the 60-75 kWh battery models. By the way the law would be broken because they are asking for a price where it is assumed that the feature has not ever been turned on; ie brand new and at a premium as you are quoted a price that is a few $100 greater than if ordered at time of sale originally.

Kosta | 21 août 2016

Strictly hypothetical.

dansplans | 21 août 2016

It would only be unethical and illegal if there was some fraudulent activity going on.

For example disabling a previously enabled larger battery, could constitute fraud, in much the same way as tampering with an odometer on an ICE car.

Selling a battery upgrade on a battery that was not software upgraded, would not be unethical, though pricing such an upgrade on a used vehicle would be problematic. It is doubtful that full price could be charged.

dsvick | 22 août 2016

I would think that they'd be hesitant to do that, if for no other reason than they could lose money if the next owner didn't want the additions.

When you trade in your car the amount you receive for it is based, in part, on its options. So if you trade in a car with AP, a bigger battery, and performance features, you'll get more money for it than if it were a base model. If Tesla then takes those options away, if the next buyer doesn't wnat them then they've only sold a base model. Granted, they probably still made money, but not as much.

There are probably some accounting issues with buying something and then reducing it's value while it sits in inventory.

PBEndo | 22 août 2016

What about physical options? If I traded in my P85 and tesla gave me a fair price for it, would it be unethical for them to remove the spoiler and resell my car without it?

fgaliegue | 22 août 2016

TBH, if ever Tesla were to implement a policy of reselling a given car with crippleware where the original car for resale wasn't crippled, they would get a bad reputation pretty fast.

Now, as to lowering the price for a potential buyer who, says, wants do ditch autopilot on a second hand car, or even limit the battery pack from 75 to 60, uh... Well, it is a "no cost" for Tesla to cripple the car this way I suppose, but who on Earth would want that?

PBEndo | 22 août 2016

I don't see this as a ethical problem. Compare it to any other option or upgrade and there would be no concern.

Once the car is sold back to Tesla, they can alter it any way they want and resell it according to the value of the new configuration. If Tesla did this, who is the victim?

1. The original owner was paid extra for the residual value of his car since it included the upgrade.
2. The new buyer now has the option of saving some money or paying more for the upgrade if they feel it is worth it at any point in the future. Had the upgrade been kept in place, the new buyer would not have the option, though they may have saved some money depending on what Tesla charges for the upgrade before/after the sale. If they do not choose the upgrade, they save money and get a car that can still be upgraded in the future - that upgradeability option has value in itself.
3. Both parties participate in a fair transaction. They get what they paid for. Nobody is fleeced.

Anybody who has ever searched for a pre-owned car with the right combination trim and options can immediately recognize the value of being able to change the options later.

Silver2K | 22 août 2016

lets take this away from cars for a sec.

if I traded in my Surface pro to Microsoft that I installed office on and was not allowed to transfer it to another unit, you think it's unethical for them to sell the unit reformatted without office?

EXACTLY!

PBEndo | 22 août 2016

@Silver
If Microsoft paid you an appropriate premium above the Surface Pro base value that represented the Office install, then they can do with it what they want.

PBEndo | 22 août 2016

Presumable, the value of the upgrade (i.e.autopilot or Office) increased the trade in value.

It would be,in effect, Microsoft giving you a prorated refund on the Office license that you would no longer be using and then reselling the office license to someone else. Where's the problem?

Silver2K | 22 août 2016

lol I guess I wasn't clear.

I was trying to say it's not unethical :)

Silver2K | 22 août 2016

that went completed in the wrong direction :)

Efontana | 22 août 2016

There is no such thing as a previous owner.
There is only a current owner and a use history.

PBEndo | 23 août 2016

Oh, sorry Silver!

dansplans | 23 août 2016

Software license is probably a horrible way to illustrate. With MS you don't ever "own" the software at all. If it is not transferable, your right to use it dies when you sell the unit to MS. They wouldn't have paid you a premium for what they already own, lol

As I said previously, it is only unethical if adding or subtracting a feature distorts the usage history of the vehicle in some way that might be fraudulent. Frankly the whole notion is somewhat silly, in that Tesla, or anyone else is going to want to obtain the highest resale price possible. They would include as many upgrades as possible to achieve this.

sklancha | 26 août 2016

If an owner of an AP enabled 75D, trades in their car- the amount of $$ they get will take the 75 kwH and AP options into consideration. If they decide to sell as a 60 (turn off the 15kwh) and disable the AP, they will lose how much they can ask for it, so it doesn't make sense. If the original owner bought it as a 60 and never activated the AP, they would not get as much money. Now Tesla could easily offer it in whichever format that is in demand, and add to the sales price accordingly. If Tesla tried to fake that those featires were never activated in the fir add t place, they would be risking a loss in revenue if new buyer doesn't want those features.

SamO | 26 août 2016

You can't buy a used 40 from Tesla.

You can't buy a 60 from Tesla without Supercharging activated.

If owner A never bought the option, Tesla turns it on. Tesla then includes the option to owner B in the elevated resale price.

trisailor33 | 26 août 2016

It is not complicated. Think of these options as something like a removable roof rack, or some other removable accessory or upgrade. You sell the car to the manufacturer (or anyone). They then have the choice to remove the roof rack and sell it at a lower price. Or leave the roof rack on and sell it a higher price. There is no ethical dilemma.

brando | 30 août 2016

As you all have read, with autonomous cars, ownership may well go down.

And I always suspected the car dealer charged me for the undercoating that was already paid for by the first owner. And the special seat fabric protection. ;-}