Accused of exaggerating the safety of Robotaxi, Tesla faces a class-action lawsuit from investors
An investor has filed a class-action lawsuit in federal court, accusing Tesla and CEO Musk of exaggerating the effectiveness of their autonomous driving technology before the launch of the Robotaxi service, concealing potential safety hazards and traffic violations, and misleading the market. The lawsuit claims that this misleading behavior has led Tesla to face higher regulatory risks and caused the stock price to drop a cumulative 6.1% within two days around June 25
Media reports indicate that an investor has recently filed a lawsuit against Tesla and its CEO Elon Musk, accusing the company of exaggerating the effectiveness of its autonomous driving technology before launching the Robotaxi service.
The plaintiff stated in the complaint that Tesla officially launched the highly anticipated Robotaxi service in Austin, Texas, on June 22, with only a small number of vehicles in trial operation. However, in the following days, multiple media outlets reported traffic violations that occurred during the service, drawing the attention of the National Highway Traffic Safety Administration (NHTSA), which had previously investigated Tesla's driver assistance and autonomous driving software.
As a result of the negative coverage, Tesla's stock price fell by a total of 6.1% over the next two trading days, closing at $327.55 per share on June 25. The plaintiff filed a class-action lawsuit in the U.S. District Court for the Western District of Texas on Monday, claiming that while Tesla heavily promoted its technology, it concealed the risks of dangerous driving or traffic violations that its autonomous vehicles might pose, thereby increasing the likelihood of regulatory scrutiny.
Tesla's stock price dipped 0.068% during trading on Monday, reporting at $309.05.
The plaintiff, Denise Morand, has initiated a class-action lawsuit against Tesla, CEO Musk, current CFO Vaibhav Taneja, and former CFO Zach Kirkhorn. The proposed class-action lawsuit targets investors who purchased Tesla securities since April 19, 2023 (the day Musk heavily promoted Tesla's driver assistance and full self-driving features during an earnings call), seeking compensation for alleged violations of securities laws.
Tesla Previously Ordered to Pay $243 Million for Autonomous Driving Accident
Shortly before this lawsuit was filed, Tesla lost a case related to a fatal accident involving its autonomous driving system in Miami. The case stemmed from a deadly crash in 2019 caused by Tesla's Autopilot system, resulting in the death of a woman and serious injuries to her boyfriend.
The jury found Tesla 33% responsible for the accident, ordering it to pay $42.5 million in damages and $200 million in punitive damages, totaling $243 million. This marks Tesla's first significant legal defeat related to its driver assistance system. Tesla strongly opposed the ruling and stated that it would appeal.
This year, Tesla's stock price has faced ongoing pressure. On one hand, Musk's role in the Trump administration has sparked controversy (he stepped down from that position in May), and on the other hand, slowing new car sales have weighed on the company's profits.
Previously, Tesla had just approved a temporary stock incentive plan worth approximately $30 billion to encourage Musk to remain in his position. Musk is the world's richest person, involved in multiple business sectors. Tesla stated in a letter to shareholders:
"We believe that this reward will motivate Elon to continue staying at Tesla and focus his unparalleled leadership skills on further creating shareholder value."
