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Tesla ordered to upgrade self-driving computer for free due to ‘false advertising’

A judge has ordered Tesla to upgrade a customer’s self-driving computer for free so that they can subscribe to Tesla’s Full Self-Driving program without an additional cost. It’s a victory for customers frustrated with Tesla selling a self-driving package to customers before the company has actually delivered a fully functioning feature.

Tesla has claimed that all its vehicles produced since 2016 have “all the needed hardware” to become self-driving with future software updates.

The automaker has yet to deliver on that promise, and the company actually had to upgrade the hardware in vehicles produced since 2016. Most notably, Tesla had to upgrade the onboard computer on which it runs its self-driving software. The new computer is known as Hardware 3.0 or the FSD computer.

To make good on its 2016 promise that vehicles produced going forward would have “all the needed hardware” to become self-driving, Tesla offered a free computer retrofit to owners who ordered the Full Self-Driving package.

The fact that Tesla was doing the retrofit for free squashed people’s concerns about needing to update hardware to access self-driving.

However, things got more complicated last year when Tesla launched its Full Self-Driving subscription package for $199 per month. Instead of outright buying the Full Self-Driving package, which now costs $15,000, Tesla owners had the opportunity pay $199 a month to get the features available under the package.

The problem is that for owners who didn’t have the Full Self-Driving computer retrofit, Tesla was asking for $1,500 (later reduced to $1,000) to get the computer before they could get a FSD subscription.

Tesla FSD advertising

As we pointed out in our article about the situation, this seemed to go against Tesla’s promise of upgrading hardware for free if needed in order to achieve the self-driving capability promised since 2016.

Now a Tesla owner has successfully tested this theory in court.

Tesla Model 3 owner Ian Jordan decided to bring his complaint to small claims court in the state of Washington after his requests for a resolution from Tesla were ignored.

His Model 3 had the hardware 2.5 computer and Tesla wanted to charge him $1,000 to upgrade to the new computer before he could subscribe to FSD. Jordan challenged that charge in the small claims court.

Tesla ended up not showing up to defend itself, so Jordan won. But, the judge’s ruling was still interesting.

Judge Matthew A. Skau wrote in the case’s conclusion:

Furthermore, Plaintiff purchased a second Tesla Model 3, relying on advertisement from the company that all Tesla 3 models come with all the necessary hardware for self-driving. Defendant learned that, in fact, installing the self-driving function would cost $1,106 in further hardware upgrades in violation of Tesla’s false advertising.

He is basically calling Tesla’s claim “false advertising.”

Jordan also made a separate claim against Tesla over lost functionality in his other Tesla vehicle that was equipped with the original MCU1 media unit. Even though it was still under warranty, Tesla said it couldn’t fix the issue and instead recommended a paid upgrade to the new generation of media computers (MCU 2).

The judge found that this was a breach of warranty and ordered Tesla to pay Jordan $1,657.50 – the cost of upgrading to the new computer. He even ordered a $500 award to compensate for the loss of AM radio since Tesla’s solution of upgrading to the new computer instead of restoring the functions of the original computer resulted in the loss of AM radio, which is not available in the MCU 2.

Jordan told Electrek that Tesla quickly paid what the court ordered.

Electrek’s Take

This owner paved an interesting path for Tesla owners in similar situations to force Tesla to do the right thing. However, be warned that the difficulty of filing in small claims court varies in difficulty depending on location.

Customers are also exploring other avenues – including a class action lawsuit – of holding Tesla to its promises about hardware and delivering a functional self-driving feature.

Top comment by Kevin McLeod

Liked by 42 people

Sounds reasonable.

I don't plan to subscribe to or purchase FSD on my 2018 M3, so it doesn't affect me, but Tesla did advertise the vehicles as being hardware-ready for FSD.

View all comments

We reported last week that Tesla tried to get the lawsuit dismissed by saying that “failure to realize a long-term, aspirational goal is not fraud.”

For those willing to go through the small claims system, Jordan’s approach might be a better short-term solution.

Interestingly, Jordan said that he used our article about the FSD subscription situation as evidence in the case in front of the judge. Funny enough, Tesla CEO Elon Musk blocked Electrek’s and my personal Twitter accounts after we posted that article.

We can’t confirm that it is the reason why we were blocked, but there was nothing else we posted around that time that could have triggered this.

FTC: We use income earning auto affiliate links. More.

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Avatar for Fred Lambert Fred Lambert

Fred is the Editor in Chief and Main Writer at Electrek.

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