Tesla misled South Korean customers about automated-driving tech, consumer group alleges

Tesla has misled tens of thousands of South Korean customers by marketing driver-assistance software that the company knows cannot be legally used in most of its vehicles in the country, according to a complaint an advocacy group plans to file with a consumer protection agency on Thursday.

Tesla has marketed Full Self-Driving (Supervised) software to prospective buyers in South Korea for years, often collecting lump-sum payments of 9.043 million won ($6,726).

FSD can be used on about 20% of Tesla vehicles registered in South Korea - those manufactured in the US, Tesla Korea country manager Seo Young-deuk said in parliamentary testimony last month. Those cars meet US vehicle-safety standards that South Korea recognizes as part of a free trade agreement, according to the forthcoming complaint to the Korea Fair Trade Commission (KFTC), seen by Reuters.


The complaint to the regulator, which also handles antitrust, has not been previously reported.

Most Tesla vehicles in South Korea, however, are manufactured in China, where no such agreement exists. Tesla only recently started the process for obtaining FSD certification for China-made vehicles, despite charging customers for the software for more than three years.

Tesla did not respond to requests for comment. A KFTC official said the agency launched a probe earlier this year into Tesla's advertising of its FSD system and has received written responses from the company, but declined to provide further details.

SOUTH KOREAN FAIR TRADE COMMISSION INVESTIGATING

It is unclear how many South Korean customers purchased FSD subscriptions on ineligible vehicles, but Tesla has sold more than 170,000 Shanghai-produced vehicles in South Korea since 2023, according to Tesla data sent to South Korea's National Assembly.

"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, who leads automotive issues at the advocacy group Citizens United for Consumer Sovereignty.

Tesla continued to market FSD as sales of ineligible China-manufactured Teslas surged in South Korea in recent years. Sales of FSD-incompatible Teslas made in China grew more than fivefold in South Korea from 2023 through last year, when 99% of new Teslas sold in South Korea could not legally use FSD, according to data Tesla submitted to the National Assembly.

Despite years of promises from CEO Elon Musk that all Teslas would soon become fully driverless vehicles, FSD is not autonomous and requires active human supervision.

Tesla has sought to expand FSD's reach beyond North America, particularly in Europe, where the company has waged a pressure campaign against European regulators.

TESLA SALES SURGE IN SOUTH KOREA

Tesla surpassed BMW this year as South Korea's top imported-car brand, according to South Korean import data.

Tesla sold FSD for one-time payments for years ahead of the service's activation last year, before shifting to a monthly subscription of 150,000 won ($112) in August.

The complaint alleges that Tesla promoted FSD last year as "coming soon" and posted a demonstration video filmed in South Korea without clearly disclosing that the technology could only be used in a small fraction of Teslas being sold.

Tesla knew those limitations but continued to market the software to all customers, the complaint said.

Tesla Korea manager Seo testified during an October 8 parliamentary hearing that the company had not formally requested FSD testing from the transport ministry. Two weeks later, Tesla applied for certification.

The ministry said FSD does not comply with local safety rules, including requirements for drivers to keep their hands on the wheel, according to a statement it sent to a lawmaker, reviewed by Reuters. The transport ministry could not be reached for comment.

The consumer group accused Tesla Korea of deceptive marketing and asked the KFTC to issue a temporary cease-and-desist order on marketing FSD for ineligible vehicles, impose administrative fines and refer the case to state investigators.

A Seoul court last month dismissed a lawsuit filed by Tesla owners seeking refunds for its FSD option, which was not activated in South Korea until late last year.

The court rejected their claim that Tesla had failed to deliver the driver-assistance system, saying regulatory and legal restrictions had limited the company's ability to roll out further functions.

($1 = 1,344.5600 won)