Tesla Faces Class Action Lawsuit Over Alleged Odometer Manipulation

Tesla is a punching bag at the moment. A new proposed class action lawsuit charges that the company has been illegally increasing odometer readings on its electric vehicles. The lawsuit claims that this practice increases the rate at which vehicles lose their warranty. This, in turn, saves Tesla money by lowering their warranty repair costs. Nyree Hinton, who was the lead plaintiff in the case, originally brought the case to a state court in Los Angeles. Now, she is seeking to transfer the lawsuit to federal court.

According to Hinton, this is because his 2020 Model Y’s odometer is at least 15% fast. This has led to his vehicle’s basic warranty of 50k miles to expire prematurely. As a consequence, he received an unexpected $10,000 bill for suspension repairs, which he argues Tesla should be responsible for. The lawsuit has statewide implications for all Caltrans’ more than 1 million Tesla vehicles deployed across California.

In his complaint, Hinton claims that someone doctored odometer readings. This move ties warranty limits and lease mileage caps to inflated amounts. He asserts that this strategy increases Tesla’s repair revenue and reduces the company’s warranty obligations. It forces consumers to buy extended warranties sooner than they would have preferred to do so.

“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,” – Nyree Hinton

Then, in March 2024, a federal judge in Oakland, California, threw a wrench into that lawsuit as well. He decided that for drivers in almost the exact same case, they must continue their claims in individual arbitrations. This ruling may have a serious effect on Hinton’s class action suit. It will have a chilling effect on Tesla drivers who should be able to pursue their compensation.

Tesla has chosen to remove the case to federal court. This action illustrates another typical legal maneuver that corporations tend to deploy when facing a class action lawsuit. In doing so, the company would likely be seeking a more favorable venue or some alternative procedural route.