Tesla Inc. reached an agreement to settle a class-action lawsuit on May 24 with buyers of its Model S and Model X cars over allegations that the company's Autopilot driver-assistance technology was unsafe and inoperable, Reuters reported May 25.
The Tesla buyers alleged in the lawsuit that the company's Autopilot system was "essentially unusable and demonstrably dangerous," in addition to charging that enhanced Autopilot capabilities, which cost an extra $5,000 for consumers who purchased the cars, were not "safer" or "stress-free," as Tesla advertised. The suit was filed in the U.S. District Court for the Northern District of California's San Jose division in April 2017.
As part of the settlement, Tesla agreed to place more than $5 million into a settlement fund, Reuters reported. Class members will receive between $20 and $280 in compensation. The settlement agreement, announced in a filing in federal court, must still be approved by District Judge Beth Labson Freeman, according to the report.
The plaintiffs named in the suit are owners of Tesla Model S and Model X from Colorado, Florida, New Jersey and California, who accused the company of engaging in unlawful trade practices by employing deception, fraud and concealment. They alleged that features such as automatic emergency braking, auto high beams, and side and front collision warnings did not work.
Tesla was also accused of violating various state consumer protection and unfair competition laws.
A Tesla spokesperson said in an emailed statement to S&P Global Market Intelligence that the company wanted to "do right" by its customers and has agreed to compensate customers who bought the 2.0 version of Autopilot and had to wait longer than expected for the features.
The spokesperson added that although the settlement is specific to customers in the U.S., the company has decided to compensate all customers globally in the same way.
"Since rolling out our second generation of Autopilot hardware in October 2016, we have continued to provide software updates that have led to a major improvement in Autopilot functionality," the Tesla spokesperson said.
The settlement comes at a time when Tesla is dealing with regulatory investigations over a fatal car crash near Mountain View, Calif., in March. According to Reuters, the vehicle's Autopilot engaged at the time of the accident.
Additionally, on May 23, a pair of U.S. consumer advocacy groups reportedly urged the U.S. Federal Trade Commission to investigate the company's "deceptive and misleading" use of the term Autopilot for its assisted-driving system.
