Tesla will face allegations of monopolizing its vehicle repairs and parts markets, after US District Judge Trina Thompson in San Francisco ruled that Tesla owners could proceed with a class action lawsuit.
The plaintiffs claim that Tesla coerces them into paying high prices and enduring long wait times for repairs, leveraging the threat of voided warranties to dissuade them from seeking independent repair services.
This ruling breathes new life into the lawsuit, which had been previously dismissed in November.
The lawsuit alleges that Tesla’s practices violate both the federal Sherman antitrust law and California antitrust law. The plaintiffs argue that Tesla’s refusal to open enough authorized Service Centers, combined with designing vehicles that require proprietary diagnostic and software updates, effectively creates a repairs monopoly.
Furthermore, Tesla is accused of restricting original equipment manufacturers (OEMs) from selling parts to anyone other than Tesla, limiting consumers’ access to necessary components.
In a ruling on June 18, 2024, Judge Thompson found substantial evidence supporting these claims, highlighting Tesla’s practices of coercion and monopolization. She noted that Tesla’s restrictive policies force owners to make undesired purchases, a form of tying that is illegal under antitrust laws. (via Reuters)
This finding is significant as it suggests that Tesla’s control over repairs and parts could be an intentional strategy to dominate the market and suppress competition.
Tesla’s legal team has dismissed the lawsuit as being based on an “illogical theory,” arguing that it is counterintuitive for the company to intentionally degrade its repair and parts services, which could jeopardize its profitable business of selling and leasing vehicles.
The lawsuit combines five separate complaints from vehicle owners who have paid for Tesla repairs and parts since March 2019. These owners allege that Tesla’s practices differ significantly from other automakers, who generally allow independent repair shops and alternative parts suppliers to service their vehicles. By contrast, Tesla insists on handling all servicing and parts in-house, which plaintiffs argue leads to inflated prices and extended wait times.
The plaintiffs seek a variety of remedies, including injunctive relief to dismantle Tesla’s alleged monopolies, reimbursement for overpaid services and parts, and orders for Tesla to make its repair manuals and diagnostic tools available to independent repair shops at reasonable costs.
The outcome of this lawsuit could have far-reaching implications for Tesla and the broader automotive industry, particularly concerning the rights of consumers and independent repair shops in the EV market.
