Tesla Faces Class Action Lawsuit Over Alleged Odometer Manipulation

A Tesla (Nasdaq: TSLA) owner in California has filed a class-action lawsuit claiming the electric vehicle manufacturer artificially speeds up odometers, causing warranties to expire prematurely and saving the company from paying for repairs.

Lead plaintiff Nyree Hinton purchased a used Model Y in December 2022 with 36,772 miles and soon noticed irregularities with the odometer readings. According to the lawsuit, the vehicle’s odometer consistently overestimated his mileage by at least 15% and sometimes as much as 117%.

From March to June 2023, Hinton claims his car logged 72.35 miles per day despite his consistent driving routine of just 20 miles daily. After the vehicle’s 50,000-mile basic warranty expired in July 2023, he alleges the odometer began to underreport his daily usage. In April 2024, despite driving a 100-mile commute twice to three days weekly, the Model Y reported only about 50 average daily miles.

The lawsuit contends that Tesla’s odometer system isn’t physically linked to actual distance traveled but instead relies on energy consumption, driving behavior, and predictive algorithms to estimate mileage. “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 complaint says.

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Hinton, a Los Angeles resident, is seeking compensatory and punitive damages for Tesla drivers in California, potentially encompassing more than 1 million vehicles. Tesla has denied all material allegations in the lawsuit but did not respond to requests for comment.

The case could have significant implications as odometer fraud constitutes a federal crime with cumulative penalties for each tampering instance. Tesla moved the lawsuit from state court to Los Angeles federal court earlier this month. In March 2024, a federal judge in Oakland ruled that drivers in a similar case must pursue their claims in individual arbitrations rather than through class action.

The lawsuit is filed as Hinton v Tesla Inc et al, U.S. District Court, Central District of California, No. 25-02877.

Information for this story was found via Reuters, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.