Title: Tesla Faces DOJ Investigation over Driving Range Claims as Cybertruck Becomes Make-or-Break Moment
Subtitle: Customers allege fraud and false advertising, while interest rates and competition pose challenges to Tesla’s dominance
In a latest development, the United States Department of Justice (DOJ) has launched an investigation into electric vehicle (EV) manufacturer Tesla following reports of a covert team diverting customer complaints regarding exaggerated driving range estimates. These allegations have sparked a class-action lawsuit against the company, accompanied by concerns about fraudulent practices and false advertising.
The investigation takes place amidst a series of missteps by Tesla, including a massive recall of 362,758 vehicles due to dangerous features, as well as a separate criminal investigation into the company’s autopilot claims. Subsequently, the DOJ has requested crucial information and subpoenaed Tesla for documents shedding light on the Autopilot and Full Self Driving features, as well as details pertaining to personal benefits, related parties, vehicle range, and personnel decisions.
With anticipated capital expenditures amounting to a staggering $7 billion to $9 billion this year, Tesla is eagerly working towards fulfilling orders for its highly anticipated Cybertruck before the end of November. According to reports by Business Insider, Tesla’s dominance in the EV industry appears to be fading, and its ability to reverse this trend heavily relies on the Cybertruck’s success. However, CEO Elon Musk has candidly acknowledged potential struggles with production and cash flow for the Cybertruck.
Furthermore, Tesla could face difficulties with demand as rising interest rates pose a threat. To counteract these challenges, the company may need to adjust its prices to remain competitive, as suggested by Reuters. Ultimately, shareholders have urged Musk to invest more in advertising efforts to boost demand, highlighting a potential avenue for growth.
This is not the first time Tesla has faced scrutiny over its driving range claims. Previous reports and a fine from South Korea have underscored the company’s history of overestimating driving ranges, causing some customers to express frustration. Instances have been reported where customers received only half of the expected mileage, with some even opining that gas-powered vehicles may provide more accurate range expectations compared to Tesla’s EVs.
The current investigation by the DOJ may be influenced by Tesla’s advertising practices, as the Federal Trade Commission closely scrutinizes deceptive advertising claims, especially concerning high-tech products.
As the investigation unfolds, all eyes are on Tesla’s ability to navigate these challenges while regaining credibility with customers and investors alike. The outcome may have far-reaching implications not just for Tesla but for the entire EV industry.
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