Class Action: Tesla Vehicles Worth Less After Rollout of Battery Update to Hide Lithium-Ion Battery Problems [UPDATE]
Last Updated on August 9, 2021
Rasmussen v. Tesla, Inc.
Filed: August 7, 2019 ◆§ 5:19-cv-04596
A consumer alleges in a class action that Tesla rolled out "battery improvement" software updates that ultimately harmed vehicle range and charging capability and decreased the overall value of customers' cars.
Case Updates
August 9, 2021 – Tesla Agrees to $1.5 Million Settlement for Model S Battery Class Action
Tesla has agreed to pay $1.5 million to settle the proposed class action detailed on this page, according to a motion for preliminary settlement approval submitted to the court on July 28.
The deal, which awaits approval from a judge, would cover 1,743 Tesla Model S sedans that were subject to a 10-percent reduction in maximum battery voltage from the May 2019 software update, with each vehicle’s owner slated to receive a $625 payment. Tesla has also agreed as part of the settlement to maintain diagnostic software for in-warranty vehicles to notify owners and lessees if their vehicles may need battery service or repairs for certain issues.
The proposed settlement comes after a July 24, 2020 mediation session and months of additional, subsequent negotiations, a memo in support of the settlement states.
“This amount is many times the prorated value of the temporarily reduced maximum voltage, and thus represents an excellent and efficient result for the Settlement Class,” the court filings read. “In return, the Settlement Class will release claims related to the software updates that imposed and then restored the batteries’ maximum voltage.”
Tesla drivers covered by the proposed deal are expected to receive direct notice of the settlement by mail within 100 days of preliminary approval. The settlement also calls for an official settlement website to be established, as well as an informational toll-free phone number.
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Tesla is staring down a 100-page proposed class action lawsuit centered on ostensible battery-improvement updates that the plaintiff alleges ultimately hampered affected vehicles’ range and charging capabilities and decreased the overall value of proposed class members’ cars.
Attacking what it calls Tesla’s self-portrayal as the “good guy” in the electric vehicle industry, the lawsuit states that the defendant, after a Model S battery fire incident in Hong Kong, issued an over-the-air charge and thermal management settings update as a “precautionary measure” to protect “battery longevity.” According to the complaint, Tesla issued these software updates under false pretenses as to what they would accomplish—and why they were being rolled out in the first place. From the lawsuit:
“Under the guise of ‘safety’ and increasing the ‘longevity’ of the batteries of the Class Vehicles, Tesla fraudulently manipulated its software with the intent to avoid its duties and legal obligations to customers to fix, repair, or replace the batteries of the Class Vehicles, all of which Tesla knew were defective, yet failed to inform its customers of the defects.”
Tesla, the case claims, failed to inform customers that its purported battery-longevity updates would reduce the range of their vehicles, elongate battery charging times and decrease the overall value of their cars.
The lawsuit posits that Tesla’s updates placed “an artificial, software-induced limitation on the total number of usable kilo-watt hours” for affected vehicles, which effectively limited the ability of Model S and X owners to charge battery cells up to the “natural and normal” amount of roughly 4.2 volts, and decreased the charging speed of affected vehicles.
Of Tesla’s claim that it rolled out the software updates for safety purposes, the lawsuit argues that if that were true, the company would have informed drivers that their cars were at a higher risk of catching fire and could have offered to replace the batteries of affected vehicles. While Tesla denies that the software updates harmed customers’ batteries, the complaint alleges that the automaker knew the batteries in affected vehicles were defective and pushed out the updates anyway with knowledge that they would harm range and overall performance, leaving customers left holding the bill for battery replacements.
“It is apparent that Tesla’s top priority is not the safety of its customers,” the case says, “but really, itself and its intent to avoid providing warranty battery replacements to rightful customers.”
From there, the case picks at Tesla’s alleged practices with regard to warranty claims. Customers are duped by Telsa regarding both warranties and the safety of their vehicles, according to the lawsuit, which alleges proposed class members are forced to shoulder an unfair amount of burden when “Tesla fails to recognize the problems caused by its own actions.” More from the complaint:
“Customers are harmed by Tesla’s assurances and warranties and are left completely helpless at the hands of Tesla. Tesla’s ability to directly control, affect, and effectively decrease the value and mileage range of its vehicles after they are sold constitutes unfair business practices and violations of state and federal consumer protection and warranty laws. Punitive and exemplary damages are especially warranted here, where Tesla has acted completely with the intent to avoid its legal obligations and duties to its customers as promised.”
As the lawsuit tells it, though there have been dozens of reports of Tesla vehicles catching fire over the last six years, Tesla “clearly has not made this issue a top priority.” Summarily, the lawsuit charges Tesla knew or should have known the batteries of Model S and X vehicles were defective, released software updates under the guise of improving safety that ultimately harmed proposed class members’ vehicles, and denied warranty claims for customers who sought battery replacements.
“Tesla has been operating unchecked at the expense of customers like [the plaintiff] and other putative class members for too long,” the suit says. “Tesla must be held accountable for its duties and legal obligations that it owes to its customers and cannot be left off the hook for doing what is similarly alleged against companies operating in the technology industry.”
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