Tesla could be headed to federal court after a Model Y owner filed a class-action lawsuit alleging that the automaker is raking in money due to "systemic inaccuracies and fraudulent business practices" that benefit the company at the expense of the customers — a claim CEO Elon Musk has called "idiotic."
What's happening?
As detailed by The Plunge Daily, Los Angeles resident Nyree Hinton accused Tesla of using its software-based algorithms to falsely inflate his odometer readings by more than 50 miles each day, ultimately voiding his warranty early and leaving him with a hefty $10,000 repair bill.
"By tying warranty limits and lease mileage caps to inflated 'odometer' readings, Tesla increases repair revenue, reduces warranty obligations, and compels consumers to purchase extended warranties prematurely," the lawsuit reads.
The class-action suit was filed in the Superior Court for the State of California, County of Los Angeles, in February. Now, it has moved to the U.S. District Court in Los Angeles.
Musk recently reacted to discussion about the lawsuit on his social media platform, X, saying, "This is idiotic."
Why is this important?
Electric vehicles offer a range of benefits regardless of the brand. Because they have fewer moving parts and don't need oil changes, they require much less maintenance. Charging an EV is also significantly cheaper than filling up a tank with gasoline.
It is true that manufacturing an EV generates more pollution than making a gas-guzzler, but, as the Environmental Protection Agency explains, EVs typically account for much less pollution over their lifetimes, as they don't release any asthma-linked fumes from their tailpipes. That can translate to more comfortable global temperatures and healthier communities in the long run.
However, even though Consumer Reports' 2023 and 2024 Annual Auto Surveys revealed that Tesla vehicles have the lowest repair and maintenance costs overall, the latest lawsuit is likely to further damage brand trust — and could make people wary of owning an EV altogether.
Musk's involvement in U.S. politics is one key reason for declining brand loyalty, perhaps making Tesla feel as polarizing as a political candidate. This has led to slumping sales at home and abroad. The fact that consumers have more purchase options than ever in a fast-growing EV market is among the other factors.
What's being done about this?
Tesla has been embroiled in multiple lawsuits involving vehicle performance metrics over the past several years.
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Good driving range 🔋 In March, a class-action suit alleging Tesla misled consumers about EV ranges fell flat, though the federal judge ruled that the plaintiffs could pursue individual arbitration, as The Plunge Daily noted. However, a judge ruled in December 2023 that an ongoing class-action lawsuit regarding the automaker's Safety Score system could move forward.
Ultimately, the results of the class-action lawsuits could impact millions of drivers. As for Hinton, he is seeking statutory and punitive damages for himself and impacted customers, with his lawsuit "outlining a broader pattern of alleged misconduct by the company," per the report.
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