Topline
A California judge allowed a prospective class-action lawsuit against Tesla’s insurance unit to move forward, adding to a list of several lawsuits the Elon Musk-run electric automaker has faced over the last year.
A Tesla sign is seen at Tesla in Buena Park, Calif. on Sunday Dec. 3, 2023. (AP Photo/Richard … [+]
Key Facts
Illinois plaintiff Ricky Stephens filed the lawsuit in April on behalf of Tesla drivers in nearly a dozen states, alleging the automakers’ insurance unit charged Tesla customers inflated insurance premiums due to a faulty Forward Collision Warning system, which alerts drivers when there’s a high risk that they may collide with something in front of them.
Stephens alleges Tesla’s insurance policy promised to calculate premiums based on Tesla drivers’ real-time safe driving habits, including how often drivers triggered a Forward Collision Warning alert in the vehicle, according to court documents.
But the lawsuit alleges that many Tesla drivers reported “sporadic and random Forward Collision Warnings,” or saw Forward Collision Warnings reflected in their safety report despite not having experienced them while driving.
Those “false” alerts were included in drivers’ safety scores and led to higher premiums, Stephens alleged.
On Monday, Alameda County Superior Court Judge Brad Seligman denied Tesla’s motion to dismiss the lawsuit, allowing it to move forward as a prospective class action suit.
Forbes has reached out to Tesla for comment.
Key Background
Tesla launched its insurance division in 2019, with Musk promising a “vastly better” service for Tesla drivers than other traditional auto insurers. While some on social media have touted lower prices, the service has faced some pushback from drivers who say they have experienced long wait times for payouts and repairs, an inability to reach claims adjusters and glitches, according to reporting from Reuters. This latest legal battle is one of several lawsuits against Tesla that have cropped up this year. In August, three Tesla drivers filed a class-action lawsuit against the company for allegedly falsely advertising the mileage range on its electric vehicles. In a November court filing, Tesla called the Reuters article that pre-empted that lawsuit “error-ridden” and argued that customers’ order agreements required them to arbitrate with the company individually. In April, a Tesla owner named Henry Yeh launched a prospective class action lawsuit alleging Tesla violated his privacy rights after ex-Tesla employees told Reuters that the company accessed and shared footage recorded on customers’ car cameras. But in Tesla’s motion to dismiss that claim, the company noted that Yeh didn’t base his claim on his own injury “but on a news article” with anonymous sources. A judge in that case in October granted Tesla a motion to compel arbitration. And just last month, in a win for Tesla, a judge dismissed another class action suit that claimed it allegedly monopolized the market for its maintenance and parts by requiring Tesla customers to use Tesla-approved service centers and parts. In court filings, the company had asked for the judge in that case to dismiss because the plaintiffs had not established anti-competitive behavior, and claimed that Tesla’s terms were consistent with federal law and similar to other electric vehicle manufacturers. Outside of court filings, Tesla has not provided any public comment regarding those lawsuits and dismantled its PR department in 2020.
Tangent
Tesla and Musk have faced a whirlwind of headlines over the past week, from the highly anticipated release of Tesla’s new Cybertruck to Musk using an expletive to insult advertisers who left his X social media platform over one of his posts, which was criticized by the White House and others as being antisemitic.
Forbes Valuation
We estimate Musk’s net worth at $242.1 billion, making him the wealthiest person on earth.
