Tesla and Elon Musk face shareholder lawsuit

A shareholder has accused Tesla Inc. (NASDAQ: TSLA) of making false representations in connection with the "Autopilot" driving assistance function in order to positively influence the company's share price. The plaintiff has therefore filed a motion for class action proceedings in the U.S. Federal Court in San Francisco (Ref. 3:23-cv-00869) and is seeking damages from Tesla in an undisclosed amount, among other things. The announcement was made Monday by Pomerantz LLP, which says it is a major business and securities law firm.

According to the statement of claim, Tesla overestimated the functions of the driving assistance system and overstated them in its representations. According to the complaint, the "Autopilot" and the "Full Self-Driving" (FSD) software pose a serious risk of accidents and injuries, although Tesla has claimed the opposite. The plaintiff refers to various media reports as evidence.

In the complaint, the plaintiff states that in August 2021, the U.S. National Highway Traffic Safety Administration (NHTSA) launched a formal investigation into Tesla's "Autopilot" following collisions between Tesla vehicles and stationary emergency vehicles. In June 2022, it was also revealed that NHTSA had received more than 750 complaints from Tesla owners about sudden and unexpected braking maneuvers. The plaintiff sees this as further evidence of the risk posed by Tesla's driver assistance systems.

It was also announced that another U.S. law firm, Robbins LLP,has filed a class action lawsuit related to Tesla's misrepresentations about the effectiveness, feasibility and safety of its "Autopilot" and "FSD" technologies. The contents and wording of the notice are similar and in some cases identical to those of Pomerantz, so it was initially unclear whether it was the same initiative. According to Reuters, the agency is reporting a class action lawsuit against Tesla, CEO Elon Musk and the company's former and current chief financial officers.

Significant share price losses

Tesla's stock has suffered significant price losses due to investigations by the U.S. Securities and Exchange Commission (SEC) into CEO Elon Musk's statements about "Autopilot" and a recall of about 360,000 Tesla cars equipped with the beta version of "Full Self-Driving." The SEC was investigating whether Musk had made false forward-looking statements about the driver assistance system. NHTSA had ordered the recall because Tesla's software allowed the vehicle to "exceed speed limits or cross intersections in violation of traffic laws." Tesla agreed to the agency's request for a recall, but did not join NHTSA's analysis.

The class action lawsuit against Tesla targets all shareholders who purchased their stock between Feb. 19, 2019, and Feb. 17, 2023. The lawsuit invokes the Securities Exchange Act of 1934, which, among other things, governs information disclosure requirements for publicly traded companies.