Justice Department Probing Tesla Over Potentially Misleading Driving Range Claims

A Tesla electric car store in Washington on July 6, 2023. Madalina Vasiliu/The Epoch Times

The U.S. Department of Justice (DOJ) is investigating electric vehicle (EV) global leader Tesla on multiple issues, including the driving range of its vehicles, which is alleged to drop significantly under low temperatures.

In a recent filing with the U.S. Securities and Exchange Commission (SEC), Tesla said it had “received requests for information, including subpoenas from the DOJ, regarding certain matters associated with personal benefits, related parties, vehicle range, and personnel decisions.”

The DOJ has also requested documents related to Tesla’s Autopilot and Full Self-Driving (FSD) features, a fact the company disclosed in an earlier filing in January. Tesla clarified that “no government agency in any ongoing investigation has concluded that any wrongdoing occurred.”

Tesla EVs have been shown to perform lower than claimed when it comes to driving ranges. A July report by nonprofit Consumer Reports stated, “We found temperatures can have impact [on EV range], but Tesla stands out for coming up short of claimed range no matter the weather.”

The test looked at how EVs respond in frigid, mild, and warm weather. Among Tesla EVs, Consumer Reports tested Model Y, which has a range of 326 miles, per the U.S. Environmental Protection Agency (EPA). However, the vehicle did not register near the EPA range in the three environmental conditions.

In warm weather, Tesla’s Model Y had a range of 274 miles, according to the report. This was the highest out of the three ranges. In mild weather, the range dropped to 252 miles. And in cold weather, it dropped further to 186 miles, which is 57 percent of the EPA driving range.

In January, the Korea Fair Trade Commission (KFTC) announced a 2.85 billion won (about $2.2 million) fine on Tesla for failing to inform customers that its vehicles had shorter ranges when operating in low temperatures.

Since August 2019, Tesla exaggerated “driving ranges of its cars on a single charge, their fuel cost-effectiveness compared to gasoline vehicles, as well as the performance of its Superchargers,” on its local website, the KFTC said in a statement, according to Reuters.

The agency pointed out that in cold weather, the driving range of Tesla EVs drops by up to 50.3 percent compared to what was advertised. Earlier in 2021, a South Korean consumer group claimed that the driving range of most electric cars fell by up to 40 percent in cold temperatures, with Tesla being the worst performer.

In the SEC filing, Tesla said it could not predict the impact of the DOJ investigations. If the DOJ decided to pursue an enforcement action against Tesla, the company could be negatively affected—“there exists the possibility of a material adverse impact on our business, results of operation, prospects, cash flows, financial position, or brand.”

Tesla Under Investigation

By stating that the DOJ requested information on “personal benefits, related parties, vehicle range, and personnel decisions,” Tesla admitted to the probe being “a lot wider than just looking at Autopilot and FSD features,” Erik Gordon, a University of Michigan business and law professor, told The Associated Press.

Specifying these items in the filing suggests that Tesla lawyers see them as serious enough to warrant their inclusion in public disclosures, he stated.

A seller shows the dashboard of the Tesla Model S car at the electric carmaker Tesla showroom of El Corte Ingles store in Lisbon on Sept. 1, 2017. Patricia De Melo Moreira/AFP via Getty Images

Moreover, the fact that the DOJ is sending subpoenas is also noteworthy. “The DOJ often starts with a formal written request and escalates to administrative subpoenas if it thinks it isn’t getting full cooperation,” Mr. Gordon said.

Jacob Frenkel, a former SEC enforcement attorney and ex-federal prosecutor, told AP that the DOJ’s investigation into “personal benefits” and “related parties” suggests a possible link between the agency’s probes and Tesla CEO Elon Musk.

The investigation into the driving range “also reflects a concern about the company’s representations about vehicle features,” he said.

“Adding the notion of a material adverse impact on the company’s brand does suggest a heightened concern as to the potential consequences that could flow from a federal civil or criminal action,” Mr. Frenkel said. “It is reasonable to interpret these disclosures as suggesting an expanded continuing and even potentially more damaging investigation.”

In the SEC filing, Tesla also said it is facing multiple lawsuits related to a data breach incident that affected several current and former employees.

Each of these lawsuits is seeking “monetary damages and other relief” and could negatively affect the company’s operations and financial position, it stated.

Autopilot and FSD

Tesla’s automated systems—Autopilot and FSD—are under scrutiny for safety issues. Tesla’s Autopilot is an assistance system aimed at driving on highways. In contrast, FSD is designed for urban maneuvering and does not require user input.

Even though it is named “Full Self-Driving,” Tesla makes it clear that the current FSD features “do not make the vehicle autonomous” and that they require “a fully attentive driver, who has their hands on the wheel and is prepared to take over at any moment.”

While Autopilot is available in every Tesla EV, the FSD is an extra feature that requires a monthly subscription.

A Tesla electric car store in Washington on July 6, 2023. Madalina Vasiliu/The Epoch Times

The U.S. National Highway Traffic Safety Administration (NHTSA) has been investigating Tesla’s automated systems since an accident in June 2016 in Florida, where a Tesla driver using the Autopilot mode was killed after the vehicle went under a tractor-trailer crossing its path.

The agency deployed investigators to look into 35 Tesla crashes in which the automated systems were suspected to have been deployed, according to AP. At least 17 people died in these incidents. There have been 14 instances of Tesla EVs crashing into emergency vehicles when the Autopilot mode was activated, per the outlet.

NHTSA is also investigating complaints that Tesla EVs can automatically trigger brakes without a valid reason.

In July, the NHTSA raised concerns about Tesla allowing drivers to use Autopilot for long periods without requiring them to have their hands on the steering wheel.

“NHTSA is concerned that this feature was introduced to consumer vehicles, and now that the existence of this feature is known to the public, more drivers may attempt to activate it,” John Donaldson, the agency’s acting chief counsel, wrote in a July 26 letter to Tesla.

“The resulting relaxation of controls designed to ensure that the driver remains engaged in the dynamic driving task could lead to greater driver inattention and failure of the driver to properly supervise Autopilot.”

The Epoch Times reached out to Tesla for comment.