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- Tesla shareholders are suing the EV maker and its CEO Elon Musk over its alleged self-driving capabilities.
- Plaintiffs say the company hid the potential for its self-driving technology to create “serious risk of accident and injury”.
- Tesla stock price fell 5.7% on Feb. 16 after NHTSA forced a recall of 362,000 vehicles over concerns over FSD software.
Elon Musk and Tesla were sued Monday by shareholders for alleged falsehoods in the company’s claims of self-driving capabilities that they say hurt shareholder value, a report said.
According to files seen by ReutersInvestors led by Thomas Lamontagne accuse the EV maker of a four-year process of defrauding shareholders by misleading them about the potential for the company’s self-driving technology to create a “serious risk of accident and injury.”
Tesla’s self-driving technology is suspected to be the cause of several high-profile accidents, which have forced recalls by regulators.
On February 16, Tesla was forced out by the National Highway Traffic Safety Administration (NHTSA). Recall 362,000 of its vehicles out of concern, the FSD software can cause it to behave “unsafe” at intersections. That coincided with a 5.7% drop in stock price, equivalent to a $38.6 billion drop in market value for the company.
According to Reuters, shareholders argued that the share drop was one of many instances where shareholder value was hurt by the company’s self-driving claims.
“As a result of defendants’ wrongful acts and omissions, and the sudden decline in the market value of the company’s common stock, plaintiff and other members of the group suffered significant losses and damages,” the complaint said, according to Reuters.
This isn’t Musk’s first lawsuit over the company’s ambitious self-driving technology sued by drivers in September about similar falsehood claims related to 2016 advertisements promising that FSD was “just around the corner”.
Tesla disagrees that it committed fraud, arguing that its lofty goals simply haven’t found success yet.
“Mere failure to achieve an ambitious long-term goal is not fraud,” Tesla’s lawyers wrote in a November document. as reported by CNN.
In recent months, more attention has been paid to self-driving technology, with Tesla co-founder Martin Eberhard called it “bullshit”.
Tesla did not immediately respond to Insider’s request for comment.
