- Tesla shareholders are suing the EV maker and its CEO Elon Musk over its claimed self-driving capabilities.
- Plaintiffs say the corporate concealed the potential for its self-driving tech to cause “serious risk of accident and injury.”
- Tesla’s share price fell 5.7% on February 16 after the NHTSA forced a recall of 362,000 vehicles over FSD software-related concerns.
Elon Musk and Tesla were sued by shareholders Monday over alleged falsehoods in the corporate’s claims about self-driving capabilities that they argued hurt shareholder value, a report says.
In response to filings seen by Reuters, investors led by Thomas Lamontagne accuse the EV maker of a four-year means of defrauding shareholders by misleading them over the potential for the firm’s self-driving technology to create a “serious risk of accident and injury.”
Tesla’s self-driving technology is suspected to be the reason behind several high-profile accidents, which have forced recalls by regulators.
On February 16, Tesla was forced by the National Highway Traffic Safety Administration (NHTSA) to recall 362,000 of its vehicles over concerns its FSD software may cause it to act “unsafe” at intersections. That coincided with a 5.7% drop in its stock price, such as a $38.6 billion drop in market value for the corporate.
In response to Reuters, shareholders argued that the drop in stocks was considered one of several instances where shareholder value was harmed by the corporate’s self-driving claims.
“Consequently of defendants’ wrongful acts and omissions, and the precipitous decline available in the market value of the Company’s common stock, plaintiff and other class members have suffered significant losses and damages,” the criticism said, per Reuters.
This is not the primary lawsuit Musk has faced over the corporate’s ambitious self-driving technology, having been sued by drivers in September over similar falsehood claims linked to 2016 promoting that promised FSD was “just across the corner.”
Tesla disagrees that it has committed fraud, arguing that its lofty goals simply have not found success yet.
“Mere failure to understand a long-term, aspirational goal is just not fraud,” lawyers for Tesla wrote in a November filing, as reported by CNN.
Scrutiny has grown on self-driving technology in recent months, with Tesla’s own cofounder Martin Eberhard calling it “crap.”
Tesla didn’t immediately reply to Insider’s request for comment.