Tesla Faces Class Action Over Allegedly Covering Up Model S, X Suspension Defects

Tesla Inc TSLA is facing a class-action lawsuit brought on by owners that allege that the automaker actively concealed suspension defects in Model S and Model X vehicles.

What Happened: The suit, filed in a California federal court on Friday, alleges that “Tesla has not only failed to disclose the existence of the Suspension Defect” but also took “active measures to conceal its knowledge by misrepresenting the reasons that the affected suspension parts fail.”

The complaint made references to a recall in China that affected nearly 40,000 vehicles exported to China and produced at the company’s Fremont, California plant between Sep 13, 2013, and Oct. 15, 2018.

The plaintiffs claim that in the United States, the Elon Musk-led automaker took a different stance — blaming the suspension problems cited by the Chinese authorities on “driver abuse.”

“Tesla is gambling with the lives and safety of hundreds of thousands of additional drivers and passengers whose vehicles suspension parts at an imminent risk of failure,” the complainants stated.

Why It Matters: The lawsuit alleges a coverup wherein the automaker attempted to avoid “the financial fallout” that would result from a recall.

The complaint further points to online reports going back to 2016 where Tesla required customers to sign non-disclosure agreements in return for “goodwill repairs.” 

The practice was halted after the U.S. National Highway Traffic Safety Administration exerted “significant pressure,” as per the lawsuit. 

In May, another lawsuit was filed against the automaker that alleged that 2014-16 Model S and 2015-2016 Model X vehicles were equipped with defective touchscreen media control units that routinely fail.

It was reported in June that the NHTSA was probing touchscreen failures in the 2012 through 2015 Model S vehicles, as per the Associated Press.

Musk said this month that safety was the “Primary Design Goal” for as NHTSA widened its probe on touchscreen failures affecting 159,000 Model S and Model X vehicles.

Price Action: Tesla shares closed 6.43% higher at $555.38 on Tuesday and rose 1.26% to $562.40 in the after-hours session.

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