By Tina Bellon
NEWYORK (Reuters) – Tesla <TSLA.O> on Thursday reached an agreement to settle a class action lawsuit with buyers of its Model S and Model X cars who alleged that the company’s assisted-driving Autopilot system was “essentially unusable and demonstrably dangerous.”
No further details of the agreement, announced in a filing in San Jose federal court late Thursday, were available. The deal still has to be approved by U.S. District Judge Beth Labson Freeman.
Tesla and Steve Berman, a lawyer for the car owners, did not immediately respond to a request for comment.
The case was closely watched in the automotive and legal communities, as it was the only known court challenge Tesla faced with regard to its assisted-driving technology.
The company has come under increased scrutiny over its Autopilot system in recent months after two Tesla drivers died in crashes in which Autopilot was engaged. The most recent crash, in March, is being investigated by safety regulators.
Autopilot, released in 2015, is an enhanced cruise-control system that partially automates steering and braking. Tesla has said the use of Autopilot results in 40 percent fewer crashes, a claim the U.S. National Highway Traffic Safety Administration repeated in a 2017 report on the first fatality, which occurred in May 2016. Earlier this month, however, the agency said regulators had not assessed the effectiveness of the technology.
The 2017 lawsuit in San Jose federal court named six Tesla Model S and Model X owners from Colorado, Florida, New Jersey and California who alleged the company had engaged in fraud by concealment, and had violated various state consumer protection and unfair competition laws.
They sought to represent a nationwide class of consumers.
The Tesla owners said they had paid an extra $5,000 to have their cars equipped with the Autopilot software, which promised to provide additional safety features, but in fact was “completely inoperable,” according to the complaint.
The plaintiffs alleged that features such as automated emergency braking, side collision warnings and auto high beams did not work or were unreliable.
They said the system was unsafe to use as it brakes unexpectedly for no reason and fails to brake when approaching large vehicles, such as trucks and buses.
On Wednesday, two U.S. consumer advocacy groups also urged the Federal Trade Commission to investigate what they called Tesla’s “deceptive and misleading” use of the name Autopilot for its assisted-driving technology.
(Reporting by Tina Bellon; Editing by Bernadette Baum)