The carmaker was found to have lied about the history of a secondhand car.
Not only does Tesla regularly make headlines on US soil, but now that the company is firmly planted in China, the EV giant has been creating quite the stir. Tesla has been in hot water with the Chinese government for numerous quality issues relating to models assembled at its Shanghai Gigafactory, including the Tesla Model 3 and Model Y. The Chinese government has suspected the manufacturer of using defective parts in its cars, and now Xi Jinping and his merry G-men have even more reason to keep an eye on the brand: Tesla has just been convicted of fraud.
The story starts in June of 2019, when Mr. Han Chao, a resident of Tianjin, China bought a certified used Tesla Model S P85 with the promise that it had been cleared of any issues, and had never been in an accident before. A few days after picking up the car, Chao had to return the vehicle to the Tianjin Tesla Service Center complaining that the car stopped working after reaching 75 mph. His dashboard would light up with fault codes, and the accelerator pedal died.
Chao asked Tesla for a refund which was denied. He then contacted the Market Supervision and Administration Bureau to negotiate between the two parties. The consumer agency recommended Chao take the car for a thorough inspection, which revealed that the original left C-pillar and left rear fender had been cut and replaced, meaning the car had been in an accident before.
Chao then tried to sue Tesla in Tianjin, but the company filed a jurisdiction dispute seeing as it is headquartered in Beijing. Chao then filed a lawsuit there. Tesla tried to wriggle out of the accusations, and tried to prove that the damage was not structural in nature, and even claimed that cutting and welding new parts would make the car stronger.
Nevertheless, Tesla was convicted on December 4, 2020 and ordered to may Mr. Chao RMB379,700 ($59,000) and an additional RMB1,139,100 ($176,000) as a penalty for committing fraud.
Tesla appealed the decision on December 6, 2020 and brought in two "experts" to weigh in on the state of the car. Neither inspected the actual car, but gave testimony based on photos provided by Tesla, which did not sit right with Chao, and clearly not with the court, which once again ruled in favor of Chao.
The final ruling on this case was made last week on September 16 when Tesla was still found to be in the wrong. Chao took to the Chinese social media platform Weibo to detail his experience and to celebrate his victory.
Tesla has been accused of trying to swindle clients in the US and Norway by turning lemon cars into loan vehicles, and reselling defective buyback cars with clear issues to customers abroad in what is known as 'lemon laundering.' The company has been confronted about this type of nefarious behavior, but Chao's case is one of the first to set a legal precedent (at least in China) that Tesla won't want to deal with again.