The EV giant is caught in a major scandal linked to hacking dashboard readings to shorten the warranty period and brush off requests for repairs.

Tesla, already hit by plummeting sales in recent months following Elon Musk’s racist remarks, is once again at the center of controversy as a new class-action lawsuit accuses the electric vehicle giant of manipulating the odometer to dodge its own repair and warranty responsibilities.

The lawsuit, filed on 7 February 2025, claims Tesla is intentionally inflating mileage readings on its vehicles to accelerate warranty expiration and vehicle depreciation, sparking outrage among customers and renewed scrutiny of the company’s business practices.

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According to the plaintiff, a California man who purchased a used 2020 Model Y with 36,772 miles, he noticed “peculiar patterns in mileage accumulation” while consistently taking his car in for suspension repairs. Despite a “consistent driving routine” involving short commutes to work and local errands, the odometer showed an average of 72.35 miles per day — more than three times what he expected based on his habits.

“As a result of this increased mileage accumulation, Plaintiff’s Basic Warranty expired well ahead of schedule – when the odometer read that the vehicle had reached 50,000 miles,” the lawsuit states. Tesla subsequently refused to cover further suspension issues, citing the expired warranty.

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After the expiration, however, the plaintiff noticed a sharp decline in the vehicle’s daily mileage estimates, which he said were “more closely aligned with his historical data on his other vehicles.” This sudden correction raised suspicions that Tesla had been manipulating mileage readings to its own benefit.

“Tesla Inc. employs an odometer system that utilizes predictive algorithms, energy consumption metrics, and driver behavior multipliers that manipulate and misrepresent the actual mileage travelled by Tesla vehicles,” the lawsuit reads.

“In so doing, Defendants can, and do, accelerate the rate of depreciation of the value of Tesla vehicles and also the expiration of Tesla vehicle warranties to reduce or avoid responsibility for contractually required repairs as well as increase the purchase of its extended warranty policy.”

The lawsuit further alleges “systemic inaccuracies and fraudulent business practices” designed to undermine vehicle value and exploit customers.

“These systemic inaccuracies and fraudulent business practices undermine the value of Tesla vehicles and their warranties, erode consumer trust, and suggest intentional practices designed to financially benefit Tesla Inc. at the expense of its customers,” it adds.

Buyers complaining on social media

This is not the first time Tesla owners have raised red flags over odometer discrepancies. On Reddit, users have long shared concerns over inflated mileage readings.

“Is Tesla inflating odometer to show more range, ding lessors with over miles and duck repairs under warranty?” one user questioned. “As I return my leased Model Y I noticed the odometer is off by 20% vs my Lexus RZ.”

Another posted, “I’m leasing the Model 3 and disappointed at how it reports miles. My 16-mile drive to work was clocked as 21 miles. I’ve only owned it 5 months and it thinks I’ve done 6,000 miles already.”

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While the class-action suit remains pending, its implications could be significant, especially amid broader turmoil for the automaker. Tesla has faced a sharp decline in sales — nearly 9% in the U.S. year-over-year in Q1 2025, according to Cox Automotive — and its share price has plummeted over 34% since the start of the year.

These financial woes are compounded by backlash over CEO Elon Musk’s controversial political involvement and racist remarks via X, the social media platform he owns. Musk, now head of the Department of Government Efficiency (DOGE) in Donald Trump’s administration, has drawn criticism for his far-right stances and aggressive moves to shrink the federal government, alienating many former Tesla supporters.

BYD taking the lead

As Tesla gears up to report what could be a disastrous first-quarter earnings result, this lawsuit adds to the mounting challenges facing the embattled EV pioneer. Whether the company can regain consumer trust — or even defend itself against these damning allegations — remains to be seen.

In 2024, Tesla maintained its position as the world's top seller of battery electric vehicles (BEVs), narrowly surpassing China’s BYD. Tesla delivered approximately 1.79 million BEVs globally, while BYD sold about 1.76 million BEVs during the same period. However, in the fourth quarter of 2024, BYD overtook Tesla in quarterly BEV sales, delivering 595,413 units compared to Tesla's 495,570.

Additionally, when considering total new energy vehicle (NEV) sales — which include both BEVs and plug-in hybrid electric vehicles (PHEVs) — BYD led globally in 2024, selling over 4.27 million NEVs.

Past sins

In a 2023 investigation, Reuters found that Tesla had "rigged the dashboard readouts in its electric cars to provide 'rosy' projections of how far owners can drive before needing to recharge." U.S. federal prosecutors initiated an investigation into Tesla's advertised vehicle range claims as a result of that reporting.

The Reuters investigation also uncovered that Tesla had established a "Diversion Team" tasked with canceling service appointments related to range complaints. This team operated to alleviate the burden on service centers overwhelmed by customer concerns about unexpected range drops. Employees reportedly celebrated canceled appointments, with each cancellation saving Tesla approximately $1,000.

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Earlier in 2023, South Korean regulators fined Tesla 2.85 billion won (approximately $2.2 million USD) for exaggerating the driving ranges of its cars on a single charge, their fuel cost-effectiveness compared to gasoline vehicles, and the performance of its Superchargers on its official website since August 2019.

Authorities found that Tesla's vehicles could experience a range reduction of up to 50.5% in cold weather compared to the advertised figures.

Yet, there’ve been no legal consequences for Tesla in the U.S. pertaining to the alleged manipulations with dashboard readings.

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