Tesla was ruled to refund RMB 379,700 to the car owner and pay an additional fine of RMB 1,139,100.
In a case involving the alleged sale of a vehicle that had been involved in a major accident, Tesla was sentenced by a Chinese court to a refund and a fine of more than RMB 1 million which triple the purchase price of the vehicle.
Han Chao, a Tianjin user, purchased a Tesla-certified P85 Model S from Tesla's official website and was told by the salesman that the vehicle was free of major accidents before purchase. However, after inspection, the car was found to have cut welds on the C-pillar and rear fender, which led to a lawsuit in August 2019, according to Sina Tech.
After more than a year, the case came to a first-instance verdict. According to the civil ruling of the Beijing Daxing District People's Court, the vehicle owner's agreement with Tesla was revoked. After the revocation of the contract, Tesla should refund RMB 379,700 to the car owner and pay an additional fine of RMB 1,139,100.
Tesla responded by saying that it fully respects the court's judgment based on current information and will fully protect the legitimate rights and interests of consumers. However, the workmanship of the vehicle in this case is very different from that of traditional models, and Tesla believes that the vehicle appraisal report in the first trial did not fully and accurately reflect the true condition of the vehicle. As a result, an appeal will be filed.
On May 31, 2019, Han purchased a used Model S through the Tesla China website, paying a purchase price of RMB 379,700 for the car.
According to Sina Tech, before purchasing the car, Tesla promised that the used cars it sells undergo more than two hundred vehicle inspections are in good condition, have no structural damage, are less than five years old, and have a total mileage of less than 80,000 kilometers, and that they meet Tesla standards before being offered for sale on the Tesla website.
Between June 5 and August 24, 2019, the vehicles in question had frequent problems and were repaired a total of seven times.
On August 2, 2019, Han was driving the vehicle when it suddenly went out of commission and all of its electric doors and brakes failed, nearly causing a major traffic accident, the Sina Tech report said.
On November 15, 2019, a third-party company determined that the vehicle in question had structural damage and was the victim of an accident, and Han filed a lawsuit alleging that Tesla had fraudulently sold a vehicle that did not live up to its promises.
Tesla stated that there had been no major accident, no structural damage caused by the replacement of the fender panels, and that it had not engaged in any fraudulent conduct in the sale of the vehicle.
Tesla argued that during the original owner's use of the vehicle, on January 8, 2019, an extremely minor collision occurred while driving through a lane change.
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Based on the evidence, including photographs of the scene, the damage agreement, the accident certificate, and the repair bill, it was proven that the accident did not injure the safe structure of the vehicle at all and did not constitute a major accident or structural damage. Tesla had no knowledge of the accident and there was no intention to defraud.
The Beijing Daxing District People's Court held that the repair of the vehicle in question did involve extensive cutting and welding, and that the manner and extent of such repairs would certainly have a significant impact on consumers' willingness to purchase the vehicle, and that Tesla's mere informing the buyer that "there was no structural damage to the vehicle" was not enough to achieve the required level of information disclosure. Whether by positive action or negative omission, Tesla met the objective elements of fraud.
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