In a recent development, the United States Department of Justice (DOJ) has initiated an investigation into Tesla, the electric vehicle (EV) manufacturer, following reports of misleading driving range claims. This comes after a class-action lawsuit was filed against the company by three customers who alleged fraud and false advertising due to grossly exaggerated driving range estimates.

According to a Reuters report in July, Tesla had secretly created a team to divert customer complaints about the driving range, as the actual range fell far below the company's estimates. The report stated that the directive to present optimistic range estimates came from Tesla Chief Executive Elon Musk himself.

The mounting backlash faced by Tesla over these overly optimistic driving range estimates has come at a challenging time for the company. Tesla recently faced criticism and a criminal investigation over its Autopilot claims, as well as a recall of 362,758 cars due to safety concerns related to the Full Self Driving (FSD) Beta.

In a recent Securities and Exchange Commission (SEC) filing, Tesla disclosed that the DOJ had requested information and subpoenaed the company for documents related to its Autopilot and FSD features. Additionally, the investigation covers matters pertaining to personal benefits, related parties, vehicle range, and personnel decisions. This suggests that the DOJ is scrutinizing all of Tesla's recent missteps.

Tesla's SEC filing also indicated that the company is expected to exceed its target of $7 billion to $9 billion for capital expenditures this year. However, Tesla aims to return to its target in the next two years after launching new vehicle models, including the highly anticipated Cybertruck, which is expected to be delivered by the end of November.

As Tesla faces increased spending and pressure to lower prices, it is focused on maintaining its dominance in the EV industry. Business Insider recently reported that Tesla's market dominance was fading, with the success of the Cybertruck being a determining factor. However, Elon Musk admitted on an earnings call that the company would face difficulties reaching volume production with the Cybertruck and making it cashflow positive.

These challenges are compounded by concerns about declining demand due to rising interest rates and the need to lower prices to remain competitive. Tesla shareholders have urged Musk to consider investing more in advertising efforts to stimulate demand. While Tesla has historically avoided advertising, Musk confirmed that the company plans to start advertising at a larger scale to identify effective marketing strategies.

The DOJ's investigation into Tesla's misleading driving range claims is not the first time the company has faced criticism for overestimating ranges. Car and Driver previously reported that Tesla's advertised driving ranges were on average twice as far off as most other EVs' real-world results. In January, Tesla was fined $2.2 million by South Korea for exaggerating driving ranges.

Tesla's upcoming advertising campaigns could potentially attract further regulatory scrutiny. The Federal Trade Commission notes that it closely examines consumer claims of deceptive advertising, especially related to high-tech products. Some Tesla customers have expressed disappointment, claiming that the actual driving range fell significantly short of the advertised figures. This has raised concerns about the accuracy and transparency of Tesla's claims.

As the DOJ launches its investigation into Tesla's misleading driving range claims, the automotive industry and investors will be closely watching the outcome and its potential impact on the company's reputation and future.