Recognition of violations of the Fair Labeling and Advertising Act and the Electronic Commerce Act
A fine of 2.852 billion won and a penalty of 1 million won were imposed.

The Fair Trade Commission (FTC) imposed a fine and a corrective order on Tesla for violating the Fair Labeling and Advertising Act and the Electronic Commerce Act.

Nam Dong-il, director of the Fair Trade Commission's Consumer Policy Bureau, announced in a briefing on the 3rd that the commission has decided to impose a corrective order, a fine of 2.852 billion won (provisional), and a penalty of 1 million won on Tesla for violating the Fair Labeling and Advertising Act and the Electronic Commerce Act.

Tesla's violation of the Fair Labeling and Advertising Act was that from August 16, 2019 until recently, it falsely, exaggeratedly, or deceptively advertised the following on its domestic website (tesla.com/ko_kr) regarding the driving range, supercharger charging performance, and fuel cost savings of its electric vehicles:

Accordingly, the Fair Trade Commission imposed a fine of 2.852 billion won on Tesla along with a corrective order.

Tesla advertised on its Korean website that the driving range was "more than 000 km on a single charge," making it seem like it could drive more than 000 km under any conditions.

▲ Tesla driving range advertisement (Image source: Fair Trade Commission)

Unlike the domestic website, the US website only charges one charge.The maximum possible distance is advertised as up to.

Although the driving range advertised by Tesla in Korea is the certified driving range (combined temperature) that measures the maximum distance that can be driven on a single battery charge, it is shown as if the vehicle can drive farther than that.

Driving distances longer than advertised are typically only possible under ambient temperature and urban conditions, and are shorter than advertised in most other driving conditions.

For the Model 3 Long Range, the Ministry of Environment certified single-charge range is 446.1 km in normal temperature-combined conditions and 220.7 km in low temperature-urban conditions, which is up to 50.5% less than the advertised range.

The falsehood, exaggeration, and deception regarding the supercharger charging performance were also acknowledged.

Tesla advertised that it could charge 000 km in 30 minutes (or 15 minutes) using a Supercharger, without disclosing the type of Supercharger or test conditions.

A 30-minute charge with a Supercharger V3 will charge about 60% (Model 3), a 15-minute charge will charge about 49% (Model 3, Y, S, X), and a 35% charge (Model S, X). The additional driving distance is advertised by multiplying the driving range by this percentage with a 30-minute or 15-minute charge.

The Fair Trade Commission acknowledged that Tesla advertised the charging performance tested with the Supercharger V3, but that it was difficult to achieve the advertised Supercharger charging performance with the Supercharger V2, and thus, it was false and exaggerated.

On August 16, 2019, when the advertisement began, only Supercharger V2 (maximum charging speed 120 kW/h) was installed in Korea, and Supercharger V3 (maximum charging speed 250 kW/h) was installed after March 31, 2021.

Even after Supercharger V3 is installed, consumers will not only use Supercharger V3, but will also selectively use Supercharger V2 or V3 to charge, taking into account driving routes and surrounding charging infrastructure.It is common.

In addition, since the test results were conducted under optimal conditions with high charging efficiency, it is difficult to achieve the advertised charging performance in everyday charging environments, and thus, it is acknowledged to be false and exaggerated.

The analysis of the charging performance simulation data for Supercharger V2 and V3 submitted by Tesla revealed that it was difficult to achieve the advertised performance in everyday charging environments, and that the data omitted the fact that charging performance varies greatly depending on the type of Supercharger, external temperature, and battery charge state, which was also acknowledged as deceptive.

The third violation of the Advertising Act was advertising the fuel cost savings and the pre- and post-sale vehicle prices as specific figures, assuming the national average charging cost of 135.53 won per kWh without any reference point or additional explanation.

The average charging rate per kWh for the top 10 charging service providers in Korea was KRW 191.7 for slow charging and KRW 255.3 for rapid charging between July 2020 and June 2021, which is 41.4% higher for slow charging and 88.3% higher for rapid charging than Tesla's assumed charging cost of KRW 135.53.

Tesla missed the point that the cost of charging an electric vehicle can vary greatly depending on factors such as the charger provider, charging speed, and government discount policies.

Accordingly, the Fair Trade Commission judged that it is difficult for general consumers to know the performance or charging-related information of electric vehicles, and thus there is a high possibility that they will misunderstand that the driving distance, etc. are the same as the advertised content, and thus there is consumer misunderstanding. The court also acknowledged the impediment to fair trade by judging that it had hindered rational choice by misleading people about the most important factors to consider when purchasing an electric vehicle.

Additionally, the Fair Trade Commission determined that Tesla violated the Electronic Commerce Act by collecting a penalty of 100,000 won from each customer who canceled an order between January 30, 2020 and January 16, 2021, and by not allowing online order cancellations.

The Fair Trade Commission issued a corrective order to Tesla for its violation of penalty collection and online order cancellation policies, and imposed a corrective order and a fine of 1 million won for failing to provide terms and conditions of use on the online mall's home page and for violating the obligation to provide information, such as the order cancellation deadline.

A reporter asked whether Tesla's advertising related to autonomous driving capabilities was misleading.

Nam Dong-il, Director of Consumer Policy Bureau, responded that the issue of whether the terms Autopilot or FSD, which refer to Tesla's technology, could be mistaken for autonomous driving rather than driving assistance technology, is an issue not only in Korea but also in Germany and the United States.

The Fair Trade Commission also explained that there was a precedent that judged that it was unlikely that consumers would misunderstand that autonomous driving was actually in operation, and that it was insufficient to judge that consumer misunderstanding arising from autonomous driving was a violation of the law.