July 25, 2024
Electric & Hybrid Cars

Lawsuit accuses Tesla of monopolizing vehicle repairs and parts, must face owners’ claims

A U.S. judge ruled that Tesla vehicle owners can proceed with a proposed class action lawsuit alleging that Elon Musk’s electric car company monopolized markets for repairs and parts. The lawsuit, initially dismissed last November, has been given new life by U.S. District Judge Trina Thompson in San Francisco.

Judge Thompson’s ruling allows owners to pursue claims that Tesla coerced them into paying high prices and enduring long wait times for repairs, under the threat of losing warranty coverage. Owners argue that Tesla’s actions violated antitrust laws at both the federal and state levels.

The judge found evidence of a repairs monopoly in Tesla’s alleged reluctance to open enough authorized service centers, as well as in the design of vehicles requiring diagnostic and software updates only available from the company. Additionally, evidence of a parts monopoly included restrictions on original equipment manufacturers selling parts to anyone other than Tesla.

Tesla’s alleged illegal “tying” of various markets was also highlighted, with Judge Thompson noting that it coerced customers into unwanted purchases. Tesla has yet to respond to requests for comment on the ruling.

Plaintiff owners, represented by lawyer Matt Ruan, expressed satisfaction with the court’s decision and look forward to the next phase of the case. The lawsuit combines claims from five vehicle owners who have paid for Tesla repairs and parts since March 2019.

They argue that Tesla stands apart from competitors by insisting on handling servicing and parts internally, rather than allowing owners to use independent shops and third-party parts. Tesla’s direct-to-consumer sales model reported significant revenue from services and other automotive sources in 2023.

The case is known as Lambrix v Tesla Inc, in the U.S. District Court for the Northern District of California, under case number 23-01145.

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FAQ

Q: What is the basis of the lawsuit against Tesla?

A: The lawsuit alleges that Tesla has monopolized markets for repairs and parts, coercing owners into paying high prices and enduring long wait times.

Q: What evidence did the judge find of a repairs and parts monopoly?

A: Evidence included Tesla’s limited authorized service centers, vehicle design requiring company-only updates, and restrictions on parts sales.

Conclusion

The court’s decision to allow the class action lawsuit against Tesla to proceed marks a significant development in the ongoing legal battle between vehicle owners and the electric car company. The allegations of monopolistic practices and coercion will be further examined as the case progresses.

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