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Tesla Lawsuits Pile Up after Regulatory Woes


Aug. 9 2019, Updated 10:42 a.m. ET

  • Tesla (TSLA) has been slapped with a lawsuit for allegedly limiting older vehicles’ battery capacity.
  • The company was sued this month for a collision in March.

Reuters reports that “a Tesla Inc owner has filed a lawsuit against the electric vehicle maker, claiming the company limited the battery range of older vehicles via a software update to avoid a costly recall to fix what plaintiffs allege are defective batteries.” It added, “Plaintiff David Rasmussen’s 2014 Model S 85 lost battery capacity equivalent to about 8kWh but was told by Tesla the degradation was normal, the lawsuit says.”

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Not the first lawsuit for Tesla

This lawsuit isn’t Tesla’s first. Last week, Electrek reported that “Tesla is facing a new wrongful death lawsuit filed by the family of a Model 3 driver who died in a crash with a semi-truck while his car was on Autopilot.” Tesla faced another lawsuit earlier this year after an Apple engineer died in a crash. In this case, the car was also on autopilot. Although automakers and tech giants are investing in autonomous vehicle technology, it’s still far from perfect.

Tesla’s autopilot challenges

Tesla maintains that the “current Autopilot features require active driver supervision and do not make the vehicle autonomous.” Through software updates, Tesla intends to achieve complete self-driving functionality in the future.

Opinions are quite divided over self-driving cars. Autonomous technology is also used in planes, as was unfortunately highlighted after this year’s Boeing 737 MAX crashes. Boeing is facing a lawsuit that alleges it “had defectively designed the automated flight control system” in the planes.

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Tesla’s battery lawsuit

Tesla’s battery lawsuit focuses on its consumer policies. Reuters reports the lawsuit says that the company is using the pretext of “safety” and battery “longevity” to hide the battery’s defects. Tesla responded, saying that “a very small percentage of owners of older Model S and Model X vehicles may have noticed a small reduction in range when charging to a maximum state of charge following a software update designed to improve battery longevity.”

Tesla’s consumer policies and product pricing, which it frequently rejigs, have come under scrutiny. It recently announced it was reintroducing free unlimited Supercharging for new Model S and Model X cars. The move has irritated people who bought cars before the promotion.

Regulatory issues

Along with the lawsuits, Tesla is battling regulatory issues. The NHTSA (National Highway Traffic Safety Administration) has issued subpoenas and a cease and desist letter to Tesla over its Model 3 safety claims. It has faulted Tesla for calling its cars “the safest.” The company also faced heat from the NHTSA after it claimed its Model S had a 5.4-star rating. Elon Musk has also gotten into trouble with the Securities and Exchange Commission.

Looking beyond Tesla’s lawsuits and regulatory woes

Tesla gets more attention than other companies of its size. Musk’s leaked emails and tweets and the company’s lawsuits keep both bulls and bears interested. Meanwhile, Tesla’s production and delivery volumes have continued to grow exponentially. The company delivered record vehicles in the second quarter and maintained its 2019 delivery guidance. However, profitability continues to be elusive for the company. In the second quarter, Tesla posted a wider loss than analysts were expecting.

The EV (electric vehicle) space has seen good traction. Ford (F) and General Motors (GM), looking at ways to boost their EV presence, have respectively partnered with Volkswagen and Honda Motors for EVs. General Motors looked open to more partnerships during its Q2 earnings call.


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