Tesla slapped with W2.85b in fines for misleading ads

The Tesla logo is seen outside a dealership in the Brooklyn borough of New York City, US. (Reuters-Yonhap)

South Korea’s antitrust regulator said Tuesday it is imposing a fine of over 2.85 billion won ($2.23 million) on US electric vehicle maker Tesla and Tesla Korea for deceiving local consumers with false and exaggerated advertisements.

The penalty on Tesla is assessed for advertising its battery performance on its official website here dating to August 2019 for exaggerating that its electric vehicles can drive more than its driving range on a single charge, the Fair Trade Commission said.

Citing the long-range version of Tesla’s Model 3 case, the FTC said, “The EV maker advertised the car can drive ‘more than’ 446 kilometers once fully charged, however, the battery performed much lower than the company promoted in most conditions.”

The electric vehicle was able to run up to 220.7 kilometers on a single charge in cold temperatures below minus 7 degrees Celsius, less than half of the advertised information.

Unlike the misleading advertising here, Tesla used the term “up to” for the vehicle’s maximum driving range through its website in the US, the antitrust regulator explained.

Tesla also carried false or exaggerated advertisements on its V2 and V3 superchargers, as well as the amount of cost savings from its charging. The FTC said the company impeded customers’ fair trade by providing misleading information on factors that EV buyers would consider in their purchase.

The EV maker was suspected of violating the e-commerce transaction law as well. Tesla demanded local customers pay 100,000 won as a deposit when purchasing its cars online. The deposits were not refundable, even if customers canceled their orders before the cars were out.

Calling them “cancellation penalties,” the accumulated amount of fees Tesla collected between January 2020 and January 2021 amounted 95.2 million won.

Additionally, local customers were able to place orders online, but were only allowed to cancel by calling the customer service center, according to the antitrust watchdog.

The FTC saw it as a violation of customers’ rights to withdraw purchases and imposed a correction order with an additional fine of 1 million won.

The antitrust regulator also highlighted that the latest Tesla case marked its first sanction in the new technology sector over deceptive advertising practices and improper actions on customers’ order cancellations in line with customers' growing demand for EVs.

The FTC further vowed all-out efforts to deliver precise and reliable information to customers by continuously checking on other companies' similar improper practices in the future.

By Jie Ye-eun(yeeun@heraldcorp.com)