Tesla agrees to partially reimburse people who bought Autopilot 2.0 in $5 million settlement of class action lawsuit

As part of the settlement of a class action lawsuit started by a few Tesla owners, the automaker has agreed to partially reimburse people who bought cars with Enhanced Autopilot over the long delays to roll out the features promised by the package.

If the settlement is approved by the court, Tesla will pay between $20 and $280 to all U.S. Tesla owners who bought or leased cars with Enhanced Autopilot between October 2016 and September 2017.

Electrek has obtained the settlement agreement that was sent to class representatives, who will now submit their thoughts on the agreement to the court, which will decide whether or not to approve the proposal.

The lawsuit itself emerged due to some Tesla owners growing frustrated at the automaker missing deadlines for the rollout of Autopilot 2.0 features.

In October 2016, Tesla introduced a new Autopilot hardware suite, dubbed Autopilot 2.0, and promised that it would enable a series of new features to be released to owners via over-the-air software updates – eventually leading up to “fully self-driving capability”.

The cars equipped with this hardware suite were available with two packages: a $5,000 “Enhanced Autopilot” package, which promised more advanced features building on the first generation Autopilot’s features, and a $3,000 “Fully Self-Driving” package, which was sold on top of the “Enhanced Autopilot” package.

The suite was also supposed to enable several active safety features, which are standard regardless of if any Autopilot packages are added to the vehicle.

After bringing the new hardware to production, Tesla’s goal was first to release software upgrades to reach feature parity with the first generation Autopilot by December 2016 – just a few months after releasing the hardware – and to continue releasing new software updates to eventually lead to fully self-driving capability.

Tesla releases new self-driving demonstration video with real-time ‘Tesla Vision’ feed

The timeline turned out to be completely unrealistic as Tesla had a way harder time developing its own ‘Tesla Vision’ technology to replace the Mobileye technology powering the first generation Autopilot.

The safety features were first to come, but they were several months late.

It was later revealed that Tesla planned to first use Mobileye’s technology for the second generation Autopilot and gradually phase it out in favor of its own, but they couldn’t come to an agreement and the two companies had a hard fallout.

On top of the split with Mobileye, Tesla had several changes in the Autopilot leadership team. which also likely contributed to further delays in the rollout of new software updates.

It was only with an update released last month that owners have come to a general consensus that the Autopilot 2.0 is now better than the first generation, but it still doesn’t have many of the features first promised in the ‘Enhanced Autopilot’ package, like On-ramp to Off-ramp and Smart Summon.

That’s why several owners started a class action lawsuit on behalf of all Tesla owners with Autopilot 2.0 in 2017.

The frustration from the delays boiled into allegations that Tesla knew that it couldn’t deliver the features on the announced timeline and therefore, they “defrauded” customers:

Tesla’s deception has resulted in economic injury to owners of its 2016-2017 models that were sold with the “HW 2.x”2 hardware purportedly required for Enhanced Auto Pilot and Full- Self Driving Capability (the “Affected Vehicles”). By selling vehicles with inoperative Standard Safety Features and inoperative Enhanced Autopilot and Full-Self Driving features, Tesla defrauded its customers and engaged in unfair competition. Customers did not receive the benefit of their bargain—they paid many thousands of dollars for products they did not receive. Further, consumers such as Plaintiffs would never have bought their Tesla vehicles at all, or would have paid thousands less for them, but for the promised Standard Safety Features the vehicles were supposed to come with, and Enhanced Autopilot and Full-Self Driving capabilities consumers could supposedly activate in short order by purchasing Tesla’s expensive software options.

They never provided any evidence of fraud and Tesla has always denied that it purposely misled buyers and instead said that it was overoptimistic about the transition to its own computer vision technology, which delayed the timeline.

The plaintiffs in the class action lawsuit were asking for several different relief actions, including Tesla buying back the Autopilot 2.0 cars, the return of the premiums paid for both the Enhanced Autopilot and Full Self-Driving Capability packages, and an unspecified amount as punitive damage.

In order to resolve the matter, the two parties engaged in a mediation with mediator Randall Wulff and it resulted in an agreement, according to the settlement that Electrek obtained.

The automaker denied any intention to defraud buyers or to settle on those claims, but it agreed to compensate buyers for the delays in order to resolve the matter.

Tesla agreed to place $5,032,530 in a settlement fund to partially reimburse “U.S. residents who purchased Enhanced Autopilot in connection with their purchase or lease of a Tesla Hardware 2 Model S or Model X vehicle delivered to them on or before September 30, 2017.” The fund will also be used to pay the attorneys’ fees and the class representative fees.

The agreement still needs to be approved by the court, but if it is approved as is, the payments will be issued based on when the owners bought or leased their vehicles:

As part of the agreement, Tesla also “reaffirms its commitment to release any Enhanced Autopilot features that as of the Effective Date are not already released in Tesla Hardware 2 Vehicles.”

Again, that would be the On-ramp to Off-ramp and Smart Summon features.

The Fully Self-Driving Capability package wasn’t included in the deal, presumably because Tesla has used safer language about the timeline of the release by saying that it was dependent on software validation and regulatory approval.

Though Tesla CEO Elon Musk did say that he expected Autopilot on the Fully Self-Driving Capability package to start being differentiated from the Enhanced Autopilot package in mid-2017.

Again, the settlement agreement needs to be approved by the court before becoming official, but sources said that all class representative are onboard – albeit begrudgingly in one case. It could still take weeks before going to the judge.

Once it is approved, a notice will be sent out and a website will be set up for owners to decide whether or not they decide to opt in the settlement. While the settlement only covers U.S. owners, it wouldn’t be surprising to see the deal expand considering the situation over the delayed features is the same across Tesla’s entire fleet of Autopilot 2.0 cars.

Tesla sent us the following statement regarding the settlement:

“Since rolling out our second generation of Autopilot hardware in October 2016, we have continued to provide software updates that have led to a major improvement in Autopilot functionality. This has included an extensive overhaul of the underlying architecture of our Autopilot software that enabled a step-change improvement in its machine learning capabilities. Our neural net, which expands as our customer fleet grows, is able to collect and analyze more high-quality data than ever before, which will enable us to roll out a series of new Autopilot features in 2018 and beyond. The customer response to our recent Autopilot updates has been overwhelmingly positive, so we know we’re on the right track.

That said, as time passed since we first unveiled Hardware 2, it eventually became clear that it was taking us longer to roll out these features than we would have liked or initially expected. We want to do right by those customers, so as part of a proposed settlement agreement for a class action lawsuit filed last year, we’ve agreed to compensate customers who purchased Autopilot on Hardware 2 vehicles who had to wait longer than we expected for these features. If the settlement is approved by the court, customers will receive different amounts depending on when they purchased and took delivery of their cars. Although the settlement is specific to customers in the US, if it is approved by the court, we’ve decided to compensate all customers globally in the same way. There’s no legal obligation to do so, but it’s the right thing to do.”

Electrek’s Take

There are a lot of different ways to look at this so bear with me for a second.

I do like the fact that Tesla owners are getting some compensation for the delays in the rollout of Autopilot 2.0 features. We have been reporting very closely on the Autopilot development since the launch of Autopilot 2.0 hardware and while we have seen some significant improvements in recent months, the lack of new features has always been an understandable source of frustration for owners.

With this said, I don’t agree with the original idea behind this class action lawsuit, which was that Tesla was defrauding buyers by lying about the timeframe of the rollout of those features.

When the reason behind something is either ineptitude or malice, it’s almost always ineptitude.

I simply can’t see what Tesla would have to gain by lying about its intention to roll out those features on the announced schedule.

They would have likely sold just as many vehicles by announcing those features without a solid timeline dependent on the safety validation of the software.

I think that Musk or whoever else set the timelines really thought that it would be possible at some point and then as they admitted, it turned out to be much more difficult than anticipated.

Now it doesn’t mean that some people at Tesla didn’t think that the timeframe was too aggressive, but they had enough confidence in the goal to make it the public timeline.

Therefore, I think that yes owners should be compensated – just not for Tesla trying to defraud them, but for having to wait much longer than Tesla originally advertised.

With this said, I don’t think owners will care much about $20 to $280. I suppose that the way to look at it is the $5,000 Enhanced Autopilot package was an interest-free loan for Tesla to develop those features for them and Tesla is now reimbursing the interest for holding on to that money for too long.

I am simply not a big fan of the litigious nature of American society and I think this could have been handled in a better way.

Again, that doesn’t work if you think that Tesla was actually actively trying to defraud people, but as I previously stated, I don’t think it was the case.

I would have preferred for Tesla to offer to give back the money from the Enhanced Autopilot and Fully Self-Driving packages to unsatisfied customers and offer them the options to buy back the packages over-the-air without the additional $1,000 fee that Tesla charges for not buying it at the purchase of the vehicle whenever they feel like the features have improved enough to be worth it.

At the end of the whole ordeal, it probably wouldn’t have cost them much more than this $5 million settlement and in this case, the lawyers are getting away with about $1 million of that amount.

That’s the problem when it goes through a class action lawsuit. It’s being negotiated through lawyers, who will always come out on top no matter what, and then the class representatives are also getting a separate fee. So it’s not always the best outcome for either party.

What do you think of the settlement and can you come up with a better solution? Let us know in the comment section below.

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