Tesla’s lawyers admit that Tesla’s Full Self-Driving technology may have been a failure — but it wasn’t a fraud.
The electric car company is facing a class-action lawsuit from customers of Autopilot and Full Self-Driving (FSD) technology. They claim they were duped, duped by statements from co-founder and CEO Elon Musk and by Tesla’s marketing materials over the past six years that suggested full-fledged self-driving was imminent. No Tesla on the road today is fully self-driving, but Tesla sells what it calls full self-driving for $15,000.
“Merely failing to achieve long-term, desirable goals is not fraud,” Tesla’s attorneys said in their defense, an argument included in a motion to dismiss the case filed last week in U.S. District Court in San Francisco.
The lead plaintiff is Briggs Matsko, a resident of Rancho Murrieta, California. If the case goes ahead, it could lead to the testimony of Tesla employees who helped develop the technology and reveal what Musk knew and didn’t know about his true capabilities when he made countless predictions over the years — including predictions that there will be a 100,000-year-old car by the end of 2020. , there will be 1 million Tesla robotaxis on the road, customers can hire them to earn $30,000 a year, and their cars will appreciate in value.
Tesla lawyers are trying to prevent that information from being made public. The motion to dismiss the case was largely based on Tesla’s argument that documents customers signed when they bought the cars forced them to pursue their claims individually through the private arbitration system.
Open trial allows clients to submit applications as a large group, called a class; arbitration means that each client will proceed independently. While a public trial could reveal testimony given by current or former Tesla employees at any given time about the state of Tesla’s automation technology development, the arbitration would keep the testimony private.
Lawsuits against Tesla and Musk have numbered in the thousands. The move to private arbitration is often Tesla’s first response to public court proceedings. The case of Cristina Balan, documented in The Times, is perhaps the most famous example. A former Tesla engineer, she claimed she was defamed by Tesla in 2017, damaging her professional reputation, but through a series of procedural arguments, Tesla lawyers kept the case out of open court.
The FSD fraud lawsuit runs through a litany of statements and promises made by Musk and Tesla about autonomous technology that will be familiar to anyone who has followed Musk closely.
These include a 2016 video that purports to show a Tesla driving itself through the streets of Palo Alto in full autonomy. Before the video, with the Rolling Stones’ “Paint it Black” playing in the background, a message read: “The man in the driver’s seat was there for legal reasons only. He didn’t drive the car. He drove it himself.”
Tesla staff later revealed that the video was fabricated and was shot in multiple episodes to rule out drive system malfunctions, including crashing into a fence. The video remains on Tesla’s website.
The lawsuit highlights multiple revisions over the years to Musk’s statement that full autonomy will be achieved within three months, six months or the end of the year (in any given year) or next year.
In its motion to dismiss, Tesla lawyers noted that Musk has often said that regulatory approval must be obtained before actual autonomy can be deployed. But neither Musk nor the lawyers said which regulators they were talking about.
“Tesla doesn’t need federal approval to deploy Autopilot in its existing vehicles,” said Bryant Walker-Smith, a law professor at the University of South Carolina who specializes in autonomous vehicles. “Tesla needs state approval in California and a handful of other states, which it hasn’t sought. Tesla needs approval in Europe, which it hasn’t sought.
Regulators have been investigating Tesla’s automation technology for years. Several fatalities have been linked to Autopilot software. NHTSA has opened several investigations, including an investigation into why Teslas appear to disproportionately crash into parked emergency vehicles. The agency has not set a firm timeline for the disclosure.
The California Department of Motor Vehicles said it was also investigating the matter. When Musk made bold predictions about full self-driving, the DMV and Tesla exchanged emails in 2019 and 2020, confirming that the company’s full self-driving mode (also known as city streets) is a Level 2 technology. The emails were released pursuant to a public records request from legal document publisher Plainsite. Under the Level 2 label, Tesla’s system is no more capable of self-driving than similar driver assistance packages sold by GM, Ford and others.
With the Level 2 system, auto companies are not required to report accidents to the DMV. Such reports would be required by law if Tesla were experimenting with fully driverless technology.
Browsing YouTube shows that Tesla is experimenting with technology that goes beyond mere driver assistance, putting untrained customers behind the wheel. DMV requires self-driving car developers to use trained test drivers.
In some videos, the Tesla FSD car turns, stops at traffic lights, and avoids pedestrians. In other videos, they hit an oncoming truck in the wrong lane, swerved into pedestrians, and in one case they mistook the moon for a yellow traffic light.
DMV regulations on self-driving cars include rules prohibiting companies from marketing vehicles as self-driving cars. The DMV began a “review” of Tesla’s Full Self-Driving capabilities under the rule in May 2021. That led to an initial complaint against Tesla last July. The agency said the case had been in the “discovery” phase for the past four months and declined to say how long that phase would last.
For the past two years, DMV Director Steve Gordon has declined to speak to The Times or any other media outlet about autonomous vehicle regulation. Lawyers for Tesla did not respond to a request for comment. Musk did not respond to a tweet seeking comment. A few years ago, Tesla disbanded its media relations team.