- Tesla is facing a proposed class-action lawsuit in California. The plaintiff alleges the company inflates the readings on the distance-measuring odometers in its vehicles to reduce warranty periods and steer people to purchase extended warranties.
Tesla is facing a proposed class-action suit from owners who allege the auto manufacturer has illegally manipulated odometer readings to reduce warranty periods and save the company from having to pay for repairs to the vehicles.
A California Tesla owner, who is seeking class-action status, says he bought a used Tesla in December 2022 that had 36,772 miles on the odometer. Soon after, he needed some repairs done, which was when he noticed “peculiar patterns” in his mileage totals.
“Tesla Inc. knowingly overstates the distances traveled in Tesla Vehicles, or at minimum tolerates substantial inaccuracy in distances traveled in Tesla Inc.’s favor, such that the ‘odometers’ in Tesla Vehicles indicate greater distances than what they actually travel,” the suit alleges.
Lead plaintiff Nyree Hinton says he noticed his vehicle was logging 72 miles per day, when he only traveled 20 miles to and from work. That surge put the vehicle past the 50,000-mile warranty limit, voiding the Basic Vehicle Limited Warranty, which covers repair costs.
The lawsuit claims that instead of measuring physical distance, Tesla odometers estimate mileage based on energy consumption and driver behavior, which inflates the numbers, so Tesla both saves money on repairs and raises revenue from other sources.
“By tying warranty limits and lease mileage caps to inflated ‘odometer’ readings, Tesla increases repair revenue, reduces warranty obligations, and compels consumers to purchase extended warranties prematurely,” the suit alleges. “Tesla has thus misled, induced, and defrauded consumers from obtaining the benefits of Tesla Inc.’s warranties.”
Tesla did not reply to Fortune‘s request for comment about the suit.