Tesla’s Botched Paperwork Leaves Owner Unable To Drive New Car for 6 Months

After taking delivery, one owner discovered his paperwork was incorrect. Now, Tesla and Texas are pointing the fingers at each other.

byRob Stumpf| PUBLISHED Aug 19, 2022 11:09 AM
Tesla’s Botched Paperwork Leaves Owner Unable To Drive New Car for 6 Months
via Tesla
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A Tesla customer is fuming after the Texas DMV denied his request to title his new 2022 Tesla Model Y because someone else was already issued the title due to a paperwork mix-up from the factory. Now, six months later, the car remains parked and unused as the owner attempts to rectify what may be part of a larger and potentially unrealized problem with Tesla's self-registration process.

Meet Joe, a first-time Tesla customer who decided to make the leap to electrification just like many other Americans are preparing to do in the coming months while he was living in Texas. (Note to readers: Joe asked us to withhold his last name as his issue with Tesla is ongoing.)

In October 2021, Joe placed an order for two new Tesla Model Y crossovers with the idea to keep whichever would be delivered first. One being a Long Range, for his wife to drive, and the other a Performance trim. Either way, he was expecting to wait somewhere between 6 and 12 months to take delivery. To his surprise (and subsequent disappointment), the Model Y Long Range was offered to him much sooner than originally quoted, resulting in him canceling the order for the Performance and taking delivery of the Model Y Long Range on Feb. 3.

Now, if you know anything about Tesla and Texas, it's that the duo has quite a complicated relationship. Despite it now being the official location of Tesla HQ, the automaker can’t actually sell cars directly to Texans without going through a loophole that requires customers to title their own cars. Tesla does this by mailing out a self-registration packet after delivery that contains the Manufacturer Certificate of Origin (MCO), purchase agreement, odometer disclosure, and application for vehicle registration. Owners then take the packet to their local tax office, pay sales tax on the vehicle, and begin the registration process.

On March 1, Joe takes his packet to the Harris County tax office. He realizes on the way that the MCO he received was actually for a Tesla Model S Plaid with a different VIN, not the Model Y Long Range that was delivered. Joe went home and reached out to Tesla to correct their mistake.

Two weeks went by with no response from Tesla. Joe phoned the automaker again and stressed that the vehicle needs to be registered within 30 days of taking possession, otherwise Texas charges a 5% sales tax penalty (around $250). Tesla said they would look into it. Radio silence until March 22nd when Joe called Tesla looking for an answer, again, unsuccessfully.

There's a wrench: Joe's work is relocating him to Pennsylvania. He made Tesla aware of this early on in the process, but that didn't speed things up enough. March 26 was moving day and not only was Joe waiting for the correct MCO, but he was getting ready to pay another 5% sales tax penalty since his car was still not titled. And because he could not legally drive the car, he paid to ship it across the country to his new home. On March 28, Joe finally received the correct MCO, but since he was no longer a Texas resident, he hired a third-party titling service called The Title Girl to complete the process for him.

Everything now seems like it's heading in the right direction. The Title Girl is handling the paperwork, the correct MCO was submitted, and Tesla agreed to reimburse Joe for the sale tax penalties (though Joe says that Tesla would later refuse).

All of that progress implodes a month later when the DMV rejects Joe's application because the title had already been issued to someone else.

“I come to find out that not only did Tesla send me someone else's Manufacturer Certificate of Origin, they sent mine to that other person,” said Joe. “That person didn't do what I think is morally and ethically sound, and straighten it out. They submitted it all to [the Texas DMV].”

Joe began searching for answers. At one point, Joe says that Tesla told him that the automaker experienced an off-by-one bug with MCOs—meaning that a number of customers may have potentially received an MCO intended for another person. This was easy to spot for Joe given that he had a Model Y and not a Model S Plaid, but it may be easy for buyers (and the Texas DMV) to overlook a mismatched VIN when the vehicle model matches.

A representative from The Title Girl confirmed to The Drive that it has encountered similar off-by-one issues as described by Joe in the past. She also indicated that the issue is “not a Texas thing," but declined to speak further.

Meanwhile, the vehicle sits in Joe's garage, unused. Its warranty and paid connectivity services tick closer to expiration. But that isn't even the part that worries Joe. He says that he is concerned about the unknown—what happens in the event of an unplanned emergency or accident? He can’t sell the vehicle without a title and the bank won't repossess the car without a lien. Plus, despite paying for insurance, he isn’t sure if funds would be disbursed if the vehicle is damaged since it’s not actually titled.

“I am royally effed right now,” said Joe. “If anything unplanned happens to me, I have no recourse.”

Eventually, Tesla provided Joe with a notarized document called a "Statement of Fact" while the issue was being looked into. It claims that the Texas DMV incorrectly recorded Joe’s VIN to another Tesla customer, making no mention of the MCO mix-up.

The wording in the document is technically correct. But since the VIN on the MCO did not match the VIN on other documents in the packet, it should have been a red flag for the DMV's title issuers. However, the Texas DMV says that it's the automaker's responsibility to make sure that a customer is sent the correct MCO and correct their own mess later if they weren't.

"The manufacturer’s certificate of origin is produced and assigned to the purchaser by the manufacturer," said a spokesperson from the Texas DMV in an email to The Drive. "If the manufacturer’s certificate of origin for a vehicle is assigned to the wrong customer and submitted to a county tax office, a title could be issued to the incorrect person. When this occurs, the manufacturer is responsible for correcting the title application for the original customer."

A Tesla employee also told The Drive she was aware of Joe's issues. She was recently working to get approval to place Joe in a Tesla loaner, something he was originally denied when he requested it in April. Joe says that Tesla instead shelled out $55 per day (or around $5,000 in total) to pay for a rental from Enterprise. But in July, Tesla stopped paying, resulting in the rental company reaching out to Joe for payment. He pointed them back to Tesla, who says that they are still looking into his title issue.

As of now, Joe's title is still in limbo. It’s been more than 6 months since he took delivery of the Model Y and is still unable to title or drive his car. Tesla and Texas DMV now seem to be stubbornly pointing the finger at one another.

So why doesn’t Joe just return the vehicle then? Even if Tesla didn't quietly cancel its 7-day return policy in 2020, the title problem didn't arise until weeks after the purchase. Joe says that he did request that Tesla buy back his car under lemon law, twice, though the automaker has reportedly not responded to either request. Joe acknowledges that this situation may not technically qualify for a lemon law buyback, at least according to the lawyers that he’s spoken with who have all refused to take the case.

And if that's not enough, Joe even tried to move up his second vehicle purchase by having Tesla reinstate his Model Y Performance order that he canceled when taking possession of the Model Y Long Range intended for his wife so that he could have a drivable car. Tesla refused and instead asked him to place a new order at current pricing, which is $8,000 higher than when he originally ordered in October 2021.

By the sounds of it, Joe might not be alone in his titling struggle, but he certainly is frustrated with the entire process. He posted his story to the Tesla Motors Club forum and was met with responses suggesting lawyers, arbitration, and recommending that Tesla buy back the vehicle—none of which seems to have worked thus far.

Perhaps the fault falls on both Tesla and the state of Texas in this case. It certainly shouldn't be so difficult to register a vehicle, and the system of checks and balances should have caught the titling issue prior to it happening. As for Tesla? Well, nearly all of the vehicle's profit margin has been wasted on a rental car, so it would behoove the automaker to resolve the issue sooner rather than later. Not to mention that the whole ordeal certainly doesn't look good for the brand.

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