Mar 14, 2023
Tesla Accused in Consumer Suit of Monopolizing Repairs, Parts
(Bloomberg) -- Tesla Inc. was sued by customers who claim they’ve been forced to pay exorbitant prices and endure long waits for car repairs due to the electric-car maker’s monopolization of replacement parts and maintenance services.
The antitrust claims were alleged in a pair of proposed class actions filed in San Francisco federal court on behalf of two California residents who own Model S vehicles. They argue owners of traditional combustion engine cars have multiple options for maintenance and repairs, or do the work themselves. Those repairs can rely on parts from the original manufacturer or parts made by other companies, according to the complaints.
Tesla owners, on the other hand, have just one option: getting their cars serviced by the company or a network of Tesla-approved service centers using only Tesla parts, according to the complaints, which cites federal antitrust laws. The plaintiffs argue the limitation is due to Tesla leveraging its market power to restrain repair and maintenance services.
The carmaker reported $6.09 billion of services and other automotive revenue last year, which included paid use of its Superchargers, insurance services and merchandise sales.
Tesla sells its cars and other products direct to consumers. Instead of operating a network of franchised dealerships with hundreds of vehicles on the lot, Tesla’s strategy has been to open stores or galleries in visible locations with lots of foot traffic.
Competitors like General Motors Co. and Ford Motor Co. operate under franchise laws that have been on the books for decades and were originally put in place to prevent manufacturers from opening stores that would compete with dealers. But as Tesla’s sales have grown in volume, its service operations have not scaled at the same pace.
The lawsuits say Tesla’s practices have caused owners of its cars “to suffer lengthy delays in repairing or maintaining their electric vehicles, only to pay supracompetitive prices for those parts and repairs once they are finally provided,” accordiing to one of the filings.
Tesla didn’t immediately respond to an emailed request for comment.
The cases are Lambrix v. Tesla, 23-cv-01145, and Orendain v. Tesla, 23-cv-01157, US District Court, Northern District of California (San Francisco).
--With assistance from Dana Hull.
©2023 Bloomberg L.P.