Tesla Sued in California: Model Y and FSD in the Spotlight

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While Tesla’s 2016 marketing video, though “staged,” did not match the brazenness of Nikola’s electric truck stunt, it still raised enough questions to affect the company’s credibility. Now, a group of plaintiffs is claiming that Tesla missold its FSD package subscription by overhyping the software’s capabilities. This has led to a class-action lawsuit, overshadowing recent positive developments for Tesla, including the imminent launch of FSD (supervised) in Japan.

To wit, a federal judge in California has certified a class-action lawsuit against Tesla for hyping the autonomous driving features of its vehicles.

In a unique start to his ruling against President Donald Trump’s administration on September 30, U.S. District Court Judge William Young included a scanned handwritten note sent to his office. The note read: “Trump has pardons and tanks – what do you have?” At the top of Young’s opinion in AAUP v. Rubio, which ruled that Trump’s effort to deport foreign-born student protesters was unconstitutional.

October 8, 2025

Tesla and Elon Musk have long claimed that all cars produced since 2016 have the necessary hardware for Level 5 autonomy.

However, recently, Tesla admitted that its HW3-configured vehicles were insufficient to handle the latest FSD software versions. The company intends to upgrade these vehicles to HW4 configurations at no cost.

Returning to the class-action lawsuit, during legal proceedings, Tesla maintained it did not overpromise on its FSD software, citing disclosures stating that the FSD stack was subject to “validation and regulatory approval.”

Judge Rita F. Lin, however, disputed this stance, noting evidence suggesting that “class members were exposed” to the Hardware Statement from October 2016 to August 2024. Consequently, she has allowed the class-action lawsuit against Tesla to proceed.

This is not the first FSD-related lawsuit for Tesla. These can be broadly categorized into:

Misleading marketing – in addition to today’s class-action lawsuit, Tesla faces a high-profile litigation from the California DMV alleging deceptive marketing of its Autopilot and FSD software stacks.
Product liability cases related to various accidents where FSD might have been active.

Positive Developments

$TSLA – TESLA ROBOTAXI TRIAL SHOWS PRICING POWER, SAYS WILLIAM BLAIR

William Blair said Tesla’s Austin robotaxi trial highlighted strong pricing power and a smooth, human-like driving experience ahead of its September launch. The service cost about half of Uber’s fares and runs…

— *Walter Bloomberg (@DeItaone) August 19, 2025

All is not doom and gloom for Tesla. For instance, a William Blair analyst believes the EV giant could generate $250 billion in revenue from its robotaxis by 2040.

The new Model Y L will drive incrementality. I don’t think there will be much interaction with sales of base Model Y since the price difference is so large and hardly anyone in China bought the AWD LR version prior.

This new Model Y will really hurt legacy auto as it will take… pic.twitter.com/S0sRNNYfvk

— James Cat (@TSLAFanMtl) August 19, 2025

Tesla has just launched its Model Y L in China, aiming to boost sales in the world’s largest EV market.

Tesla begins testing FSD (Supervised) in Japan!

Employees are first to try it, with plans to roll out via software update to existing cars. $TSLA https://t.co/gbDycxi1ff

— Herbert Ong (@herbertong) August 19, 2025

Tesla is now poised to launch its FSD (supervised) in Japan after successfully testing it in China and several EU countries.