Shareholders File Class Action Against Elon Musk and Tesla for Securities Fraud
A group of Tesla shareholders has filed a class action lawsuit against CEO Elon Musk and the company, accusing them of concealing significant risks related to self-driving systems, including "robotaxi" vehicles, which are alleged to pose safety threats.
The lawsuit, filed Monday evening in a federal court in Austin, Texas, follows the first public trial of Tesla's self-driving "robotaxi" vehicles in late June. The trial revealed several errors, including speeding, sudden braking, mounting curbs, entering wrong lanes, and dropping off passengers in the middle of multi-lane roads.
These incidents led to a 6.1% drop in Tesla's stock price over two trading sessions, resulting in a loss of about $68 billion in the company's market value.
Shareholders accused Musk and his company of repeatedly overstating the effectiveness of self-driving technology and its future prospects, which contributed to inflated financial expectations for Tesla and boosted its stock price. They cited Musk's statements during a call with investors on April 22, where he said that "Tesla is focusing intensely on launching the robotaxi in Austin in June," along with the company's statement on the same day that its approach to self-driving would allow for "wide and safe deployment across diverse geographic areas and for multiple use cases."
The expansion of the "robotaxi" comes at a time when Tesla is facing a decline in demand for its electric vehicles and increasing criticism due to Musk's political stances. Musk, the world's richest man, aims to provide this service to half of the U.S. population by the end of the year, but this requires regulatory approval and public trust in the safety of the technology.
The lawsuit is led by Tesla shareholder Dennis Morand and seeks damages for shareholders who owned shares between April 19, 2023, and June 22, 2025. The lawsuit is registered under the name "Morand v. Tesla, Inc. et al." in the federal court for the Western District of Texas, case number: 25-01213.
It is worth noting that this is not the first time Tesla has faced allegations related to its self-driving systems; on August 1, a jury in Florida found the company 33% responsible for a 2019 accident involving its self-driving system that resulted in the death of a 22-year-old woman and injuries to her friend. Tesla was ordered to pay $243 million in damages, but it blamed the driver and announced its intention to appeal.
