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Tesla sued for allegedly curbing battery capacity to avoid costly recalls

A Tesla Inc. car owner filed a proposed class-action lawsuit against the electric-vehicle maker, alleging that the company deliberately reduced battery capacity of vehicles to avoid a costly recall.

The U.S. District Court for Northern California on Aug. 8 issued summons to Tesla, giving it 60 days to respond to the lawsuit filed Aug. 7 by a certain David Rasmussen in behalf of other owners of certain Model S and Model X cars worldwide.

According to the lawsuit, the California-based company allegedly limited the battery range of older Model S and Model X cars through a software update instead of having to recall the batteries the plaintiff claims Tesla knew were defective. The plaintiff claimed that the battery of his 2014 Model S lost about 8 kilowatt hours of capacity but was told by Tesla that the degradation was normal.

According to the lawsuit, Tesla initiated an over-the-air software update in response to an incident in Hong Kong where a Model S unit caught fire after the batteries ignited. The update revised the charge and thermal management settings on Model S and Model X vehicles to further protect the battery and improve its longevity.

"Under the guise of 'safety' and increasing the 'longevity' of the batteries of the class vehicles, Tesla fraudulently manipulated its software with the intent to avoid its duties and legal obligations to customers to fix, repair, or replace the batteries of the class vehicles, all of which Tesla knew were defective, yet failed to inform its customers of the defects," the lawsuit said.

The plaintiff further claimed that Tesla was aware of the fact that "the software updates would cause significant range loss" on the affected vehicle models. The lawsuit said the affected vehicles lost as much as 20 miles to 40 miles range causing owners worldwide to spend more for a battery replacement, which costs between $20,000 and $25,000 as of the date of filing.

The plaintiff is seeking damages, an injunction, and an equitable relief for Tesla's conduct regarding the software updates and the batteries.

Tesla did not immediately respond to S&P Global Market Intelligence's request for comment.