Elon Musk's Tesla Loses Bid To Dismiss Class Action Lawsuit Over Misleading FSD Claims

Tesla Inc. TSLA has lost a bid to dismiss a proposed class action lawsuit against the automaker over its misleading claims about the FSD or Full Self-Driving system.

Lawsuits Against Tesla Are ‘Justified,' Judge Says

The lawsuit, filed by drivers from California who bought Tesla's FSD package from May 19, 2017, to July 31, 2024, and also opted out of Tesla's Arbitration agreement, Reuters reported on Tuesday.

The lawsuit also includes customers who purchased the package from October 20, 2016, to May 19, 2017, according to the report.

In the court ruling, U.S. District Judge Rita Lin said that Tesla's inability to "demonstrate a long-distance autonomous drive with any of its vehicles” as well as questions over a lack of sensors crucial for high-level autonomous driving, made the lawsuit filed by the drivers justified.

Tesla's Unorthodox Marketing Plays A Part

Judge Lin also mentioned that potential customers saw Tesla's claims about the company's cars containing the necessary hardware for FSD on the Autopilot section of its website from October 2016 to August 2024.

"While these channels alone may not ordinarily be enough to establish class-wide exposure for a traditional car manufacturer, Tesla’s distinctive advertising strategy warrants a departure from the typical approach," she said, highlighting Tesla's unorthodox approach to marketing, which relies on CEO Elon Musk's popularity in Pop culture rather than traditional channels.

A Series Of Lawsuits For Elon Musk And Tesla

The news comes as Tesla faces another lawsuit filed by investors over the company's FSD technology and its safety after the Robotaxi launch in June, which recorded instances of Tesla Robotaxis committing possible traffic violations.

Tesla was also ordered to pay $243 million in damages by a court to the plaintiffs following a lawsuit over a 2019 fatal crash, which resulted in the death of a woman in Florida when a Tesla crashed into her parked SUV.

Musk Pulls The Plug On Dojo, Tesla Sales Continue To Fall

In line with FSD and autonomous driving, Musk has pulled the plug on Tesla's in-house AI Chip development efforts by scrapping the Dojo department as the EV giant penned a $16.5 billion deal with Samsung Electronics SSNLF to develop AI6 self-driving chips.

Elsewhere, Tesla sales have continued to decline in several markets across the world, with the company recording double-digit slumps in the UK as well as Sweden, Denmark and France, highlighting the company's sales woes.

Tesla scores well on Momentum and Growth metrics, while offering satisfactory Quality, but poor Value. For more such insights, sign up for Benzinga Edge Stock Rankings today!

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