The jury verdict represents Tesla's second big win this year, in which juries have declined to find that its software was defective. Tesla has been testing and rolling out its Autopilot and more advanced Full Self-Driving (FSD) system, which Chief Executive Elon Musk has touted as crucial to his company's future but which has drawn regulatory and legal scrutiny.
The case that concluded on Tuesday, in a California state court, was filed by two passengers in a 2019 crash who accused the company of knowing Autopilot was defective when it sold the car. Tesla argued human error caused the crash.
The 12-member jury announced they found the vehicle did not have a manufacturing defect. The verdict came on the fourth day of deliberations, and the vote was 9-3.
Representatives for Tesla and the plaintiffs did not immediately comment on the verdict.
The civil lawsuit filed in Riverside County Superior Court alleged the Autopilot system caused owner Micah Lee's Model 3 to suddenly veer off a highway east of Los Angeles at 65 miles per hour (105 km per hour), strike a palm tree and burst into flames, all in the span of seconds.
The 2019 crash killed Lee and seriously injured his two passengers, including a then-8-year-old boy who was disemboweled, court documents show. The trial involved gruesome testimony about the passengers' injuries, and the plaintiffs asked the jury for $400 million plus punitive damages.
Tesla denied liability, saying Lee consumed alcohol before getting behind the wheel. The electric-vehicle maker also argued it was unclear whether Autopilot was engaged at the time of the crash.
Matthew Wansley, a former general counsel of nuTonomy, an automated driving startup, and associate professor at Cardozo School of Law, said the steering issues in this case differ from those in other cases against Tesla.
In those lawsuits, plaintiffs allege Autopilot is defectively designed, leading drivers to misuse the system. The jury in Riverside, however, was only asked to evaluate whether a manufacturing defect impacted the steering.
"If I were a juror, I would find this confusing," Wansley said.
During the trial in Riverside, an attorney for the plaintiffs showed jurors a 2017 internal Tesla safety analysis identifying "incorrect steering command" as a defect, involving an "excessive" steering wheel angle.
A Tesla lawyer said the safety analysis did not identify a defect, but rather was intended to help the company address any issue that could theoretically arise with the vehicle. The automaker subsequently engineered a system that prevents Autopilot from executing the turn which caused the crash.
Tesla won an earlier trial in Los Angeles in April with a strategy of saying that it tells drivers that its technology requires human monitoring, despite the "Autopilot" and "Full Self-Driving" names.
That case was about an accident where a Model S swerved into the curb and injured its driver, and jurors told Reuters after the verdict that they believed Tesla warned drivers about its system and driver distraction was to blame.
