Tesla accused of selling Korean drivers $7,000 self-driving feature they 'cannot use ... for even a single day’

“Tesla generated substantial revenue by selling an expensive driver-assistance system to mass-market ​buyers who cannot use it for even a single ⁠day,” said Choi Young-suk, a spokesperson for Citizens United for Consumer Sovereignty, the advocacy group making the claims, Reuters reports.

The conflict focuses in large part on where new Tesla vehicles aimed at the South Korean market are built, and where FSD has a green light from regulators. Tesla vehicles, specifically the Model S, Model X, and Cybertruck, are built in the U.S., which have the state-approved backing from the South Korea-approved KORUS free trade agreement. Those vehicles, deemed as safe under South Korean government regulatory standards, allow for FSD driver access. That amounts to approximately 20% of Tesla vehicles in the country, according to testimony from a South Korean Tesla executive in September, Reuters noted.

Other Tesla vehicles, including the Model 3 and Model Y earmarked for South Korea, are built in Shanghai, China, where the Korean safety standard isn’t applicable. That could be a problem for Tesla, as the CUCS claims the auto giant has charged a one-time $6,726 FSD payments (9.042 million won in the local currency) each from South Korean Tesla owners who own the China-manufactured vehicle, but can’t use the FSD self-driving features, Citizens United says.

The group wants the Korea Fair Trade Commission (KFTC) to crack down on Tesla, asking the Commission to ban the company from charging the FSD fee, fine the automaker, and open an investigation into Tesla’s self-driving fee history in South Korea.

The Elon Musk-run EV manufacturer may have the legal winds at their back, as a South Korean court rejected claims from Tesla owners looking for financial compensation over the lack of FSD technology in their vehicles. The court ruled that South Korea’s regulatory mandates curbed Tesla’s ability to offer self-driving.

Tesla, which does not have a formal media relations office, has not yet commented on the allegations.

Refunds and reform could be on the table for Tesla

Legal experts say Tesla’s FSD practices should stem from buyers’ engagement with company sales staff before signing any deals.

“I’d start with what the buyer was actually told before handing over the money,” Doug Burnetti, a Tampa, Florida-based product liability attorney, told Moneywise. “Did they understand that this feature wasn’t approved for their particular car, and that nobody could guarantee when it would be?”

If the sales pitch led people to reasonably believe they’d be using it soon, while the company knew there were substantial obstacles, that raises a serious deception issue. “You have to look at the whole sales pitch and how clearly those limitations were explained,” Burnetti said.

Any potential refunds would depend on Tesla’s willful intent.

“If someone paid thousands of dollars because they were misled about whether their car could use a feature, I think getting that money back is a reasonable starting point,” Burnetti noted. “You’d still have to look at what was promised and what the local law allows.”

Additional compensation may be appropriate in some cases, but it’s not a given. “A refund also doesn’t necessarily account for financing charges someone paid if that software purchase was rolled into their car loan,” Burnetti added.

Consumer transparency means being clear with customers

Legal proceedings should shine a light on the Tesla self-driving fee issue, but industry experts say transparency should be a priority with any driver/auto company engagement, and Tesla may have fallen short in South Korea.

“Tesla didn’t sell FSD as a maybe,” James McNally, managing director of SDVH, a London-based self-driving vehicle rental company, told Moneywise. “They sold it as a product, at a fixed price of nearly $7,000, collected upfront.”

McNally said a line gets crossed the moment a company takes full payment while already knowing that legal or regulatory conditions make the product unusable in that specific market.

“It’s not about future promises in general, because plenty of industries sell forward-facing products legitimately,” he noted. “The difference is disclosure.”

If that transparency is not provided, the vehicle owner pays the price.

“The buyer is putting up the money now and taking the risk that approval comes much later, possibly after they’ve sold the car,” Burnetti said. “If they financed that purchase, they could be paying interest every month on something they still can’t use.”