When I wrote about Han Chao and his certified used Model S P85 in September 2021, I said the verdict from his lawsuit against Tesla was final. I confess I did not count the BEV maker would ask a higher Court in China to try to reverse the decision. Well, it did. Like the two previous verdicts determined, the Beijing Higher People's Court told Tesla to acknowledge it had committed fraud and to pay the man what it owed him.
If you are not familiar with the story, Han Chao bought his certified pre-owned (CPO) Tesla by the end of May 2019. The company said his car had "no major accidents, no structural damage, no blisters," and more than 200 inspections of the whole vehicle. In other words, it was supposed to be almost like new, in pristine condition. However, Chao started having issues with his Model S soon after taking delivery.
On June 5, he took it to the Tianjin Tesla Service Center for repairs for the first time. He became a habitué after five more visits until his electric sedan stopped working on a highway at 120 kph (75 mph) on August 24, 2019. Luckily, Chao did not get hurt or crash the car while trying to regain control. That was when he decided it was enough: the customer asked for his money back. Tesla refused.
Photo: Han Chao/Weibo
Chao contacted the local branch of the Market Supervision Administration and filed a complaint about Tesla. The BEV maker rejected reimbursing its customer even after the authorities tried to solve the situation in a friendly way. That led the Chinese customer to ask official forensic inspectors to check his vehicle, which led him to discover it was involved in a serious crash. There were signs that the C-pillar had to be replaced. Chao sued Tesla for fraud. If he won, the company would have to give his money back and pay punitive damages equivalent to three times that value.
Tesla charged the Chinese customer RMB379,700 for the electric sedan. That's equivalent to $55,265 at the current exchange rate. On December 4, 2020, Chao won for the first time at a primary court. Apart from recovering his money, Chao was also entitled to receive RMB1,139,100 ($165,796) more. In other words, the BEV maker got its reputation tainted with a fraud verdict and had to pay the equivalent of $221,061 instead of the $55,265 Chao wanted back.
Photo: Han Chao/Weibo
At that point, Elon Musk had not tweeted that "Tesla policy is never to give in to false claims, even if we would lose, and never to fight true claims, even if we would win." That would only happen on July 31, 2021, still before what was supposed to be the last judgment on the matter. On September 16, 2021, Tesla lost again in an intermediate court. Either that means Tesla does not have in China the same policy Musk said it did in the US, or the company still thinks the Chinese justice system failed. Whatever the reason is, the company kept on fighting and took the case to the country's high court. This time, the company asked for a retrial – or else, to start the whole thing from zero.
According to CHNFund, the Beijing Higher People's Court decided on March 27, 2023, that Tesla had indeed committed fraud when it sold a repaired car as if it were in perfect condition. That said, there was no legal reason for the BEV maker to have a new trial on the matter. A retrial has to fit very specific conditions ruled by Article 207 of the country's Civil Procedure Law, which led the court to dismiss Tesla's requirement.
Photo: Han Chao/Weibo
Chao celebrated the decision on his Weibo account, where he became a celebrity. Followed by 153,000 people, he frequently mocks the American BEV maker by sharing news about defects and other issues its cars present. That led Tesla to sue him for defamation. Chao sued back, and now there are five lawsuits involving the customer and the automaker.
Chao shared that the defamation lawsuits were suspended because the foundation of these cases was still in dispute in court. That implies the legal procedures have the fraud condemnation the Chinese High Court recently confirmed as their core. The former Tesla client must bring that up more frequently than the BEV maker is willing to accept, and it has a legal department that is big enough to at least try to make Chao get tired of going to hearings.
China still has a Supreme Court, but it is not clear if Tesla can appeal to it. The car company will probably try to find a new legal thesis to try to revert the fraud conviction, which is pretty damning. It makes you wonder what the best strategy is: just accept defeat and hope that customers forget about it or dispute something three legal spheres already ruled to have happened. Rest assured, you’ll hear about Han Chao again.
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