Tesla says its self-driving technology may be a 'failure' -- but not fraud

Russ Mitchell, Los Angeles Times on

Published in Business News

Tesla's Full Self-Driving technology may be a failure, Tesla lawyers admit — but it's not a fraud.

The electric car company is facing a class-action lawsuit from Autopilot and Full Self-Driving (FSD) technology customers. They claim they were ripped off, duped by statements from co-founder and CEO Elon Musk and marketing materials from Tesla over the past six years suggesting full-fledged autonomous driving was imminent. No Tesla on the road today is capable of full self driving, and yet Tesla sells what it calls a Full Self-Driving Capability for $15,000.

In its defense, Tesla lawyers said that "mere failure to realize a long-term, aspirational goal is not fraud." That argument is contained in a motion to dismiss the case that was filed last week in U.S. District Court in San Francisco.

The main plaintiff is Briggs Matsko, a resident of Rancho Murieta, California. If the case goes forward, it could lead to deposition of Tesla employees who helped develop the technology and reveal what Musk knew and didn't know about its true capabilities when he made numerous forecasts over the years — including the prediction that there would be a million Tesla robotaxis on the road by the end of 2020, that customers could make $30,000 a year hiring them out, and that their cars would appreciate in value.

Tesla lawyers are attempting to prevent that information from going public. The motion to dismiss the case rests mainly on Tesla's contention that the papers customers signed when they bought their cars obligate them to individually file claims through the private arbitration system.

A public trial allows for customers to file as a large group, known as a class; arbitration means each customer would be on his or her own. While a public trial could reveal testimony from current or former Tesla employees on the state of Tesla's automated technology development at any given time, arbitration would keep that testimony secret.


Thousands of lawsuits have been filed against Tesla and Musk. The private arbitration move is often Tesla's first reaction against public court lawsuits. The case of Cristina Balan, as chronicled by The Los Angeles Times, is perhaps the most famous example. A former Tesla engineer, she claims she was defamed by Tesla in 2017, damaging her professional reputation, but through a series of procedural arguments Tesla lawyers have kept the case out of public court.

The FSD fraud suit runs through a litany of claims and promises made by Musk and Tesla about automated technology that will be familiar to anyone who closely follows Musk.

They include a 2016 video that purports to show a Tesla driving itself through the streets of Palo Alto, California, with complete autonomy. Before the video rolls, with the Rolling Stones' "Paint it Black" as background music, a message reads, "The person in the driver's seat is only there for legal reasons. He is not driving anything. The car is driving itself."

Tesla workers later revealed that the video was fabricated, done in multiple takes, with the driving systems failures removed, including a crash into a fence. The video remains on Tesla's website.


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