Why Some Tesla Model S Owners May Receive $625 In A $1.5M Class Action Settlement

Tesla (TSLA) has agreed to settle a class action lawsuit for $1.5 million that claimed a software update temporarily reduced the maximum battery voltage in some of its Model S EVs.

As many as 1,743 Model S sedans were affected by the suit, where vehicle owners will get paid $625 each, according to the proposed settlement documents that were filed on Wednesday in the U.S District Court in San Francisco and obtained by Reuters.

According to the documents, lawyers for the Model S owners, who filed the lawsuit contended that the “voltage limitation was temporary, with a 10% reduction lasting about 3 months, and a smaller 7% reduction lasting another 7 months before the corrective update was released in March 2020."

Class action members allege that the May 2019 update reduced vehicle performance by throttling their battery’s charging speed, maximum capacity, and range temporarily, CNBC said.

At the time, Tesla issued the over-the-air update, after a Model S vehicle caught on fire in Hong Kong, issuing a statement as reported by TechCrunch that said, “Out of an abundance of caution, we are revising charge and thermal management settings on Model S and Model X vehicles via an over-the-air software update that will begin rolling out today, to help further protect the battery and improve battery longevity.”

The lawsuit, which was filed in August 2019, claimed that Tesla released a software update over-the-air- that reduced the maximum voltage of which the batteries on some Model S vehicles could be charged, Reuters said.

In a later update, about 3% of the battery voltage was restored, and a third update released in March 2020 was designed to fully restore the battery voltage over time as the vehicles were driven, according to court documents, as reported by Reuters.

The court documents continued to say that data from Tesla showed that 1,553 Model S EVs had the battery voltage fully restored, and 57 vehicles had battery replacements with the remaining sedans to restore their battery voltage over time by driving.

The settlement also requires Tesla to “maintain diagnostic software for in-warranty vehicles to notify owners and lessees of vehicles that Tesla determines may need battery service or repair for certain battery issues,” according to CNBC.

A Dec. 9 hearing date has been slated for the proposed settlement. The settlement also includes $410,000 in fees and plaintiff attorney costs, according to Reuters.

Shares of Tesla were trading at $670.00 as of premarket hours on Friday, down $7.35, or 1.09%.