Tesla Faces Class-Action Lawsuit in California Amid Model Y Launch in China and FSD (Supervised) Rollout in Japan

Tesla Faces Class-Action Lawsuit in California Amid Model Y Launch in China and FSD (Supervised) Rollout in Japan

Please note that this content is not intended as investment advice. The author does not hold any positions in the stocks mentioned.

Tesla, while not as conspicuously deceptive as Nikola’s infamous electric truck incident, is currently facing scrutiny due to allegations regarding its Full Self-Driving (FSD) software. Plaintiffs have filed a class-action lawsuit, claiming that the company exaggerated the capabilities of its FSD package. This lawsuit casts a shadow over Tesla’s recent positive developments, such as the upcoming launch of its supervised FSD in Japan.

A significant development occurred when a California federal judge granted class-action status to a lawsuit challenging Tesla’s promotion of its vehicles’ autonomous driving features. This legal action comes amid Tesla’s repeated assertions that all vehicles produced since 2016 come equipped with the necessary hardware to achieve Level 5 autonomy.

However, Tesla’s recent acknowledgment that vehicles furnished with the newer Hardware 3 (HW3) configurations lack the capability to support the latest iterations of FSD software has raised further concerns. In response, the company has pledged to upgrade the HW3 vehicles of customers who acquired the FSD software to the more advanced Hardware 4 (HW4) configurations at no extra cost.

During legal proceedings, Tesla argued that it did not misrepresent its FSD capabilities, pointing to existing documentation that indicated the FSD stack was subject to “validation and regulatory approval.”Nevertheless, Judge Rita F. Lin contested this view, asserting that there exists substantial evidence indicating that class members were informed about the Hardware Statement from October 2016 through August 2024. Consequently, the judge has permitted the class-action lawsuit to progress.

This is not Tesla’s first encounter with legal challenges concerning its FSD technology. The ongoing lawsuits can be categorized into two primary groups:

  1. Deceptive Marketing: In addition to the current class-action suit, Tesla faces significant legal action from the California Department of Motor Vehicles (DMV) regarding alleged misleading advertising of its Autopilot and FSD software.
  2. Product Liability Issues: These cases involve various incidents where FSD may have been activated during accidents, raising further questions about the safety and reliability of the technology.

Positive Developments for Tesla

Despite the legal challenges, there are notable positive trends for Tesla. An analyst from William Blair forecasts that the company could potentially generate $250 billion in revenue from its robotaxis by 2040.

Moreover, Tesla recently launched its Model Y L in China, aiming to regain traction in the world’s largest electric vehicle market.

After successful launches of FSD (supervised) in China and several European countries, Tesla is now ready to introduce its flagship autonomous driving software in Japan, signaling its commitment to expanding its technological presence in new markets.

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