Tesla faces new lawsuit over monopoly power in repairs, parts business

Tesla’s (TSLA) latest legal issue centers around a growing frustration with owners regarding parts and repairs.

In a suit seeking class action status in federal court in San Francisco, an owner of a Model S is suing Tesla claiming she must pay exorbitant repair costs and face long wait times for service.

This is due to the fact that Tesla has monopolized the parts and service aspects of the business, the plaintiff alleges, because Tesla owners can only get their cars serviced at Tesla service centers, or authorized service shops. Additionally, Tesla vehicles can only be repaired using Tesla parts.

Owners of other vehicles can go to any number of service shops and use genuine parts — or third-party parts — to repair their cars. Because Tesla controls both the service centers and parts, the plaintiff alleges Tesla owners have to pay more for service and parts and have suffered through long wait periods for service availability, and/or long waits for parts.

Tesla isn’t the only automaker that faces class action and other types of lawsuits due to their practices or vehicles defects. However the automaker seems to get itself embroiled in one legal dispute after another, usually with respect to behavior of CEO Elon Musk.

Here are some of its biggest legal headaches.

The ‘Funding Secured’ tweet

A group of Tesla shareholders alleged in a class action lawsuit that Musk and certain company board members were liable for trading losses, allegedly caused by Musk’s 2018 “funding secured” Twitter posts about taking the electric-vehicle company private.

The case went to trial earlier this year with Musk himself spending two and a half days testifying, maintaining that his tweets were “truthful” and meant to ensure all investors had access to equal information to the take-private talks before a news leak made it public.

A jury eventually sided with Musk and Tesla and found both not liable for fraud stemming from that tweet.

Story continues

Musk’s big pay package

A group of shareholders sued Elon Musk and Tesla’s board over what it thought was an exorbitant pay package offered to Musk back in 2018. At issue was the plaintiffs’ assertion that Musk compensation of around $56 billion was not deserved, and was not an effective tool of motivation.

Plaintiffs alleged Tesla’s board did not give shareholders enough information about the pay package, and that it was essentially rubber stamped by Tesla’s board who were all handpicked by Musk. The plaintiffs also alleged the board did not effectively monitor him, as he eventually went off and bought Twitter and seemed to be spending more time there than Tesla.

Musk‘s lawyers countered that the pay package actually benefited shareholders by increasing the value of their stock 10 times during the period in question.

A ruling in this case is still pending following closing arguments in February.

Autopilot, FSD on trial

Finally, just a few weeks back in late February, a proposed class action lawsuit was filed in federal court in San Francisco alleging Tesla and Musk deceived shareholders over the safety and effectiveness of its autonomous driving software, specifically its Autopilot and FSD (full-self driving) features.

The plaintiffs allege Tesla defrauded them for four years over false and misleading statements about the autonomous software, concealing the fact that it “created a serious risk of accident and injury” and knew the software didn’t operate as it had stated.

Separately the National Highway Traffic Safety Administration (NHTSA) and the Department of Justice are investigating Tesla over its autonomous driving software. Tesla was forced to recall more than 362,000 vehicles due to defects in the software by a Tesla issued OTA (over the air) update.

And just this week on Tuesday Transportation Secretary Pete Buttigieg said about Tesla’s autonomous software, “I wouldn’t call something ‘Autopilot’ if the manual explicitly says that you have to have your hands on the wheel and the eyes on the road all the time.”

The class action lawsuit over Tesla’s Autopilot and FSD software is just in its beginning stages.

With additional reporting by Alexis Keenan.

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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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