Tesla must face owners' lawsuit claiming it monopolizes vehicle repairs and parts

By Jonathan Stempel

(Reuters) - A U.S. judge said Tesla vehicle owners can pursue a proposed class action accusing billionaire Elon Musk's electric car company of monopolizing markets for repairs and parts, breathing new life into a lawsuit she dismissed last November.

U.S. District Judge Trina Thompson in San Francisco ruled on Monday that owners could try to prove that Tesla coerced them into paying high prices and suffering long waits to have their vehicles fixed, under fear of losing warranty coverage.

Owners said Tesla's alleged coercion violated the federal Sherman antitrust law and California antitrust law.

Thompson found evidence of a repairs monopoly in Tesla's alleged refusal to open enough authorized service centers, and its designing vehicles to require diagnostic and software updates that only the company could provide.

Evidence of a parts monopoly included restricting original equipment manufacturers from selling "to anyone other than Tesla," and Tesla's selling parts to consumers only on a limited basis, the judge said.

Thompson also found evidence Tesla's alleged illegal "tying" of various markets "coerces customers into undesired purchases."

Tesla and its lawyers did not immediately respond to requests for comment on Tuesday.

They contended that the complaint was based on an "illogical theory" that Tesla intentionally degraded repairs and parts, jeopardizing its far more profitable business of selling and leasing vehicles.

Matt Ruan, a lawyer for the plaintiff owners, said they were pleased with the court's well-reasoned and thoughtful decision, and looked forward to the next phase of the case.

The complaint combined five lawsuits by vehicle owners who have paid for Tesla repairs and parts since March 2019.

They said the Austin, Texas-based company differed from rivals by insisting it handle servicing and parts, rather than let owners use independent shops and other companies' parts.

Tesla sells its vehicles directly to consumers, instead of through franchisees.

It reported $8.3 billion of services and other automotive revenue in 2023, accounting for 9% of its $96.8 billion total revenue. Vehicle sales totaled $78.5 billion.

The case is Lambrix v Tesla Inc, U.S. District Court, Northern District of California, No. 23-01145.

(Reporting by Jonathan Stempel in New York; Editing by Aurora Ellis)

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