Tesla might face a class-action lawsuit, as a US Judge signaled Tesla vehicle owners to revive a dismissed case in November, accusing Elon Musk's electric car company of monopoly.
According to owners, Tesla's alleged coercion violated the federal Sherman Antitrust Act and California's antitrust laws.
Tesla's Dismissed Monopoly Case
US District Judge Trina Thompson in San Francisco dismissed an antitrust lawsuit that accused Elon Musk's electric car company, Tesla, of monopolizing the vehicle maintenance and replacement parts market, allegedly forcing customers to endure high prices and extended repair times. Thompson ruled that the plaintiffs in the proposed class action did not demonstrate that these issues were not widely recognized when they purchased their vehicles, nor did they anticipate the costs of maintaining them. Thompson also noted that the customers did not provide sufficient evidence to support their claim that Tesla coerced them into using its services and parts solely due to their initial purchase of the vehicles.
Reviving The Monopoly Lawsuit
Thompson ruled on Monday that vehicle owners could attempt to demonstrate that Tesla compelled them to pay high prices and endure extended wait times for vehicle repairs, fearing the loss of warranty coverage.
Thompson identified evidence of a repair monopoly in Tesla's purported failure to establish enough authorized service centers and in designing vehicles that necessitate diagnostic and software updates that only the company could provide exclusively. She also noted the restriction of the original equipment manufacturers from selling to entities other than Tesla, limited direct sales of parts to consumers, and Tesla's alleged illegal tying of various markets that coerce customers into making unnecessary purchases as evidence of parts monopoly.
Matt Ruan, representing the plaintiff owners, expressed satisfaction with the court's thorough and thoughtful decision and eagerly anticipated the next steps in the case. The complaint consolidates five lawsuits from vehicle owners who have incurred expenses for Tesla repairs and parts since March 2019, arguing that the Austin, Texas-based company distinguished itself from competitors by requiring that it manage servicing and parts rather than allowing owners to utilize independent shops and components from other companies.
An Illogical Theory
Tesla and its legal representatives did not respond promptly to requests for comment on Tuesday. Still, they contended that the complaint rested on what they described as an illogical theory that Tesla deliberately degraded repairs and parts, which could potentially jeopardize its more lucrative business of vehicle sales and leasing.
Tesla is known for selling its vehicles directly to consumers, bypassing franchisees. In 2023, the company reported $8.3 billion in revenue from services and other automotive-related activities, constituting 9% of its total revenue of $96.8 billion. Vehicle sales accounted for the majority of its revenue, at $78.5 billion.
The case is Lambrix v. Tesla Inc., filed in the US District Court for the Northern District of California under case number 23-01145.
