Tesla Inc. successfully defended itself against a lawsuit from shareholders accusing the company and CEO Elon Musk of overstating the effectiveness of its self-driving technology, which allegedly inflated its stock price.
The lawsuit, dismissed by US District Judge Araceli Martínez-Olguín on Monday, claimed that Musk exaggerated Tesla’s self-driving capabilities to boost investor confidence, leading to a spike in the company’s stock value.
The shareholders argued that Musk’s optimistic claims, including a 2020 prediction that drivers could “go to sleep” while using Tesla’s Full Self-Driving (FSD) feature, were misleading. The plaintiffs also alleged that Musk sold $39 billion in stock before Tesla’s shortcomings became public. However, the judge ruled that many of Musk’s statements were speculative future projections, not falsehoods. She also noted that there was insufficient evidence connecting Musk’s hands-on management style with any misleading information.
Although the case was dismissed, Judge Martínez-Olguín gave investors the option to file a revised complaint by October 30. Tesla still faces various lawsuits and regulatory investigations concerning its Autopilot and FSD features. Federal agencies, including the US Department of Justice and the Securities and Exchange Commission, are investigating whether Tesla’s marketing of self-driving technology misled consumers. The California Department of Motor Vehicles is also moving forward with similar claims.
Despite the legal challenges, Tesla continues to advance its self-driving technology, with plans to unveil a new robotaxi platform in October.
The case is Lamontagne v. Tesla Inc., 23-cv-00869, US District Court, Northern District of California.
Bloomberg, Reuters, and Tesla Rati contributed to this report.
