A South Korean consumer advocacy group has accused Tesla of misleading customers by promoting its Full Self-Driving (FSD) software in cars that do not meet local legal standards, prompting an investigation by the Korea Fair Trade Commission.
- Tesla sold FSD software on vehicles not certified for South Korean roads.
- Over 170,000 China-made Teslas with incompatible FSD have been sold since 2023.
- Consumer group demands cease-and-desist order and administrative fines.
What happened
Tesla has been selling Full Self-Driving (FSD) software to customers in South Korea for several years, often collecting upfront payments exceeding 9 million won (about $6,700). However, only about 20% of Tesla vehicles in the country qualify to use FSD legally—those manufactured in the U.S. and compliant with recognized safety standards under a trade agreement. The majority of Teslas sold recently are produced in China, where there is no such certification yet, making FSD use illegal on most vehicles.
Despite this, Tesla continued to market FSD broadly and even posted demonstration videos filmed locally without adequately disclosing the software's limited applicability. The Korea Fair Trade Commission has begun investigating these marketing practices following a complaint from a consumer rights group alleging deceptive promotions that misled buyers into paying for software they could not lawfully use.
Why it matters
This situation raises significant consumer protection issues, as Tesla generated substantial revenue from customers who likely cannot use the driver-assistance functionality despite paying full price. The gap between marketing claims and legal vehicle compatibility undermines buyer trust and exposes vulnerabilities in regulatory oversight of emerging automotive technologies.
Moreover, the case reflects broader challenges automakers face when expanding advanced driver assistance or automated driving features across regions with varying regulations. It also highlights the need for transparent, accurate advertising to ensure consumers understand product limitations and compliance with local laws.
What to watch next
The Korea Fair Trade Commission's inquiry outcomes will be critical, including whether the agency imposes fines, mandates corrective advertising, or issues a temporary marketing ban on Tesla's FSD in South Korea. The consumer group's request for administrative penalties and referrals to prosecutors may also lead to more extensive legal action.
Tesla’s progress in obtaining certification for China-made vehicles and its broader strategy to introduce FSD internationally will be closely monitored. The company’s ability to align marketing, technology readiness, and local regulations could impact its brand reputation and regulatory compliance in competitive markets like South Korea and Europe.