Tesla pays nearly $10,000 settlement over misleading FSD claims

08 November 2023

Tesla's ambitious promises of a Full Self-Driving (FSD) system have recently faced scrutiny from the UK legal system. Edward Butler, a Tesla Model 3 owner, has successfully challenged the electric car giant, securing a settlement of approximately $10,000. The victory circles around Tesla's claims of FSD capabilities that, according to Butler, have failed to materialize, thereby breaching the Consumer Rights Act of 2015.

In 2016, Tesla introduced the FSD system as a futuristic addition to its electric vehicles, making both promises of cars capable of navigating the hustle of traffic lights and the ballet of city driving without human intervention. The system, priced initially at $3,000, has seen its cost fluctuate over the years, yet the promised autonomy of the technology has remained, at best, a work in progress.

Despite Tesla opening the beta version of FSD to US customers last year - preceded by a safety score eligibility period - its vehicles have not come anywhere close to the fully autonomous driving nirvana. The technology lingers at Level 2 autonomy, according to the Society of Automotive Engineers (SAE), requiring drivers to remain vigilant and engaged. This has understandably brought regulatory probes and legal challenges, as the moniker 'Full Self-Driving' is clearly a misnomer.

For Butler, the issue hit closer to home. His 2019 purchase of a Tesla Model 3, complete with the FSD option for $7,200 (UK price at the time of purchase), was predicated on Tesla's website claims that traffic light recognition and autonomous city driving were on the imminent horizon. When Tesla failed to deliver these features within their projected timeline, Butler took action, citing that the website's promises were a contractual element of his purchase.

Tesla's response to Butler's initial legal saber-rattling was a settlement offer devoid of interest and laden with confidentiality clauses. Butler held his ground, and Tesla, perhaps recognizing the solidity of his case, agreed to a more favorable settlement - complete with interest and sans the silence agreement.

The settlement, totaling £8,015.22 (nearly $10,000) also included court fees. And while it is not setting a legal precedent, it underscores the potency of consumer protection laws against misleading corporate advertising. Interestingly, Tesla has had its day in court before on related issues, once being mandated to upgrade a driver's FSD computer at no extra cost.

The Butler case illuminates the often cumbersome and solitary journey through small claims court, a process that, while more accessible than a full-blown lawsuit, still necessitates a savvy understanding of the legal system - a quality Tesla wished to suppress by proposing a "non-advice" clause in its settlements. This tactic is part of a broader strategy of companies like Tesla to individually settle disputes without opening the floodgates to widespread restitution claims, which, for Tesla, could involve at least 285,000 FSD customers.

Class action lawsuits, by contrast, serve as a collective hammer of justice, pooling similar grievances against corporations. Yet, the binding arbitration clauses - frequently upheld by courts - strip consumers and employees of their right to a day in court, pushing them instead towards private, often less favorable, arbitral tribunals.

The case's ripples extend beyond the legal realm, potentially affecting public perception of Tesla. While the company continues to profit from the promise of future software capabilities, the ethical question looms: would customer goodwill not be better served by offering refunds for a system that remains, for some, perennially out of reach?

For UK Tesla owners feeling shortchanged by the elusive FSD functionality, Butler's victory offers a blueprint for recourse. The Tesla Motors Club forum thread, complete with documentation of Butler's legal journey, serves as a starting point for similarly affected consumers.

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