Tesla case resolved - Car owners awarded price reductions

The lawsuit brought by 118 car owners against Tesla has now reached its final conclusion. The Supreme Court has dismissed Tesla’s final appeal, and the judgment granting the car owners a price reduction is final and binding.

The case raised fundamental questions about the extent to which manufacturers may change a product’s characteristics after delivery by updating its software, and what rights consumers have if such changes reduce the product’s performance. These issues are increasingly pertinent as a wide range of products are now connected directly to the internet.

Background to the case

The case concerned the first generation Tesla Model S, sold during the period 2013–2016.

In 2019, Tesla rolled out a software update that reduced the charging speed at Superchargers. Tesla did not inform customers that the update would reduce charging speed, and subsequently provided incorrect or misleading information to owners who queried the change.

A group of 118 car owners believed that charging speeds had been significantly reduced and claimed a price reduction. The car owners were represented by lawyers Christian Hagen Tønsberg and Hogne Huus-Hansen, respectively Associate Partner and Senior Associate at CLP, both specialising in dispute resolution.

During the proceedings, Tesla was ordered to disclose internal documentation confirming that it had deliberately reduced charging speeds. The background was that charging at the power output originally advertised by Tesla exposed the batteries to excessive and irreversible wear.

Issues resolved through a pilot case

The car owners persuaded the court to begin with a small number of pilot cases to resolve issues common to all claims.

In the pilot case, the Court of Appeal held that the software update had led to a marked reduction in charging speed. Charging speed had also become more sensitive to low temperatures.

Before the sales, Supercharging had been marketed as a central feature of the cars, and Tesla had provided detailed information about the output and charging times achievable with Supercharging. The software update led to a significant discrepancy between the information Tesla had provided in its marketing and the charging speeds the car owners could actually achieve. The cars were therefore defective.

The sales contract did not entitle Tesla to reduce charging speed. The fact that the change was made to improve battery safety and lifespan did not relieve Tesla from delivering performance in line with the information given in its marketing.

Tesla argued that the car owners had complained too late. The Court of Appeal found that Tesla had acted contrary to honesty and good faith by failing to inform owners that the update would reduce charging speed and by providing incorrect reassurances and information to customers who made enquiries afterwards. Tesla could therefore not rely on the rules on time limits for complaints.

Tesla also contended that the absolute five-year limitation period for complaints started running upon delivery of the cars and that most owners’ claims were time-barred by the time they complained. The Court of Appeal agreed with the car owners that the period began only when Tesla implemented the change in 2019.

The Court of Appeal ordered Tesla to pay NOK 50,000 in price reduction to four car owners who had been part of the pilot case. Tesla sought to appeal to the Supreme Court, but leave to appeal was refused. The pilot case thereby concluded in February 2025.

Judgment for the remaining car owners whose cases had been stayed

Proceedings then resumed for the remaining 112 owners. In the owners’ view, the pilot case had resolved all issues raised by the dispute, and the same outcome should apply to those whose cases had been stayed. Tesla, however, did not accept the pilot outcome and particularly disputed the specific quantum of NOK 50,000 per car.

The District Court considered it clear that Tesla’s objections could not succeed and issued a judgment in a simplified procedure without an oral hearing, awarding each of the 112 car owners NOK 50,000 plus interest. The Court of Appeal then refused Tesla leave to appeal. On 20 April 2026, the Supreme Court’s Appeals Selection Committee dismissed Tesla’s appeal against the Court of Appeal’s refusal. The case is therefore final and binding for all the car owners.

Legal and practical implications

This is the first dispute in which the Norwegian courts have considered a case where a manufacturer reduced a product’s performance after delivery by altering its software.

First, the case confirms that a product cannot be altered in a way that makes it no longer consistent with the contract or with information provided in marketing. This applies even when the change occurs a long time after delivery. The judgment is relevant to other internet-connected products, such as electronics, industrial systems and digital services.

The precise limits of what changes a consumer must accept, where no specific information about performance has been provided in the contract or marketing, were not, however, determined.

Second, the judgment means manufacturers must disclose the content of software updates, including changes that limit performance or may otherwise be perceived as negative for the buyer. Withholding such information will normally be disloyal, and the seller will then ordinarily be unable to rely on arguments that the customer complained too late.

Third, the case illustrates that businesses which resell products — such as many in the retail sector — may face claims long after delivery if the manufacturer alters the product’s characteristics. The Tesla case was unusual because the cars were sold exclusively through the manufacturer’s wholly owned Norwegian subsidiary. Businesses reselling products made by others will very rarely have comparable control over subsequent software updates.

What should businesses pay particular attention to?

For both manufacturers and businesses that resell products, the decision warrants a review of contractual frameworks and processes for software updates. In particular, consider:

• whether the right to change a product’s characteristics via software updates should be regulated both in upstream contracts between manufacturers and wholesalers/distributors and in the contract with the end customer,
• whether to include explicit reservations that functionality/performance may change during the product’s lifecycle,
• ensuring, before issuing a new software update, clarity about what was communicated regarding product characteristics in the contract and marketing, and
• what information is provided to the end customer/owner when the software update is rolled out.
  

CLP’s lawyers are closely monitoring developments and are available to assist with advice on contractual matters at the intersection of technology and law.