Driving range of electric car falls short; buyer allowed to terminate contract
The Dutch Supreme Court recently rendered a judgment that might enable buyers of electric cars to terminate their purchase agreement or reclaim part of the purchase price. The judgment shows that nonconformity may be assumed based on a buyer's reasonable expectations regarding the car's advertised driving range. This blog sets out the judgment and its potential precedent effect.
When comparing electric vehicles (EVs) online, one thing that stands out in the advertisements is the mention of the driving range: the maximum number of kilometres per recharge. This range is often calculated using the Worldwide Harmonised Light Vehicles Test Procedure (WLTP). This has raised the question whether a reference to the WLTP entitles the buyer of an EV to a certain minimum driving range. If that is the case, the seller breaches the purchase agreement if it delivers an EV that is not able to achieve that minimum range under all circumstances. In its judgment of 28 June 2024 (ECLI:NL:HR:2024:980), the Dutch Supreme Court shed light on this topic.
Facts of the case
The case centred on the sale of a Jaguar I-PACE, an EV with an advertised WLTP driving range of 480 kilometres. However, it was undisputed that it would not be feasible for the car to have an actual range of 480 km under all circumstances, given that an EV's range depends on several factors, such as the weather and the driver's driving style. The sales brochure contained several caveats to this end and the (corporate) buyer had acknowledged that it understood this. Having used the car, however, the buyer noted that it had a range of only 280 km during the winter months. The buyer engaged legal counsel who ordered the car dealer to adjust the car’s driving range in accordance with the WLTP, which the car dealer did not do. The buyer then decided to terminate the purchase agreement.
Proceedings
The buyer initiated proceedings claiming (among other things) a declaratory judgment that it had validly terminated the purchase agreement. The District Court rejected the buyer’s claims. However, the Court of Appeal did allow the buyer's claims, assuming nonconformity because of the EV's lower than expected driving range.
The Supreme Court judgment
The Supreme Court assessed whether the Court of Appeal had rightfully assumed nonconformity. It agreed with the Court of Appeal’s reasoning that, despite the caveats and the buyer's understanding that the WLTP range was not absolute and would not be feasible under all circumstances, there was such a large discrepancy between the advertised WLTP range and the actual range (of over 35 percent: 480 km versus approximately 300 km) that nonconformity should be assumed. The car dealer was therefore deemed to have breached the purchase agreement and the buyer was entitled to terminate the agreement.
Deviation from Advocate General Valk’s advisory opinion
The Supreme Court's judgment is particularly notable since it deviates from Advocate General Valk's advisory opinion on the case (ECLI:NL:PHR:2024:100). Valk noted that, in his view, the Court of Appeal meant to give a judgment limited to the individual case by basing its awarding of the nonconformity claim on a certain 'special use' of the EV agreed between the parties. A judgment based on a certain 'special use' agreed between the parties in an individual case would, by its nature, hardly create any precedent. Conversely, a decision accepting a certain minimum range as what the buyer can reasonably expect simply based on the advertised WLTP range would create a "far-reaching precedent" for all EVs advertised with a reference to the WLTP range. Valk therefore stated that, without a further investigation, he considered it inadvisable to assume nonconformity on the grounds of the buyer's reasonable expectations based on the WLTP range.
Key takeaways
With its judgment, the Supreme Court has shown that buyers might be able to reasonably derive certain expectations from the mention of a driving range in EV advertisements. When such reasonable expectations are not met, nonconformity may be assumed.
The judgment is likely to have some precedent effect for proceedings where nonconformity is argued on grounds of an EV's driving range falling short of the advertised driving range. On the other hand, the judgment's precedent effect should not be overstated. Although the Supreme Court agreed with the Court of Appeal's decision that, in this case, nonconformity could be assumed on the grounds of a discrepancy of over 35% between the advertised WLTP range and the actual range, it did so by referring (only) to the Court of Appeal’s considerations as "not contrary to law" and "not incomprehensible". The Supreme Court did not add any substantive considerations of its own or make any general statements on the reasonable expectations that may be derived from the WLTP range. In that sense, the Supreme Court seems to have wished to refrain from setting a "far-reaching precedent", possibly as a result of Advocate General Valk’s 'warning' to that end.
Moreover, the case pertains to a purchase agreement entered into in 2018. As EVs have become increasingly common, public knowledge of the factors and circumstances that may limit an EV's driving range is growing. Therefore, the buyer of an EV in 2024 may not be able to derive reasonable expectations about the EV's actual driving range from the advertised WLTP range like its 2018 counterpart would. It therefore remains to be seen whether the Supreme Court's judgment will give rise to other, similar judgments in the way Advocate General Valk expected it would.
Notwithstanding the above, it is advisable for EV manufacturers, car dealers and sellers of EVs to include sufficient caveats in any advertisements that mention an EV's driving range.
