(Yicai Global) Dec. 8 -- Tesla Motors Sales Service (Beijing) is appealing a court ruling that the US electric car giant’s Beijing unit committed fraud by not informing the new owner of a used Model S vehicle bought on its second-hand car sales site about a part of the auto that had been badly damaged and then repaired.

The cover up amounts to fraud under the Protection of Consumer Rights and Interests Law, the People’s Court of Beijing Daxing District said, slapping the auto dealership with a CNY1,139,100 (USD174,462) fine plus the CNY379,700 (USD58,154) cost of the vehicle, car owner Han Chao said on his Weibo account on Dec. 4.

"Tesla Beijing has not committed fraud and will file an appeal," legal advisor Xu Hui told Yicai Global on Dec. 6.

Tesla stands accused of not informing Han of the car’s repair record when he bought the vehicle. Han only discovered that a large area above the left rear wheel had been cut out and welded back on after there was a problem with the car, Han said.

As the repair did not cause structural damage to the auto, it was not included in the overall tests and assessments that Tesla conducts on every used vehicle, Xu said. Therefore, this does not constitute concealment, he added.

"Infringing consumers' ‘right to know’ does not amount to committing fraud, and there is a clear legal distinction between the two," said Wu Feng, director and partner at Longshine Law Firm, who is lead counsel on a similar case involving a damaged second-hand British marque Bentley.

In the Bentley case, the Supreme Court overruled the first-instance judgement by a local court, on the grounds that the dealer “did not commit fraud, but violated consumers' right to be informed," and reduced the fine to CNY110,000 (USD16,844) from the original CNY21 million (USD3.2 million). The car owner tried to appeal for a retrial but was turned down.

The crux of the two cases lies in whether there is the subjective perception that the seller deliberately concealed the repairs from the consumer, and whether on the objective front the damage would have led to the consumer refusing to sign a contract, Wu said.

Editors: Xu Wei, Kim Taylor