Tesla and its CEO Elon Musk have been successful in getting a lawsuit dismissed. The lawsuit accused them of misleading shareholders by exaggerating the effectiveness and safety of the company’s self-driving technology to inflate its stock price. U.S. District Judge Araceli Martinez-Olguin in San Francisco ruled that the shareholders did not provide sufficient evidence to hold Tesla and Musk accountable for falsely claiming that they were close to delivering technology that would drive safer than humans, when in reality it had “safety issues” and promoted inattentiveness.
Tesla’s vehicles come with “Autopilot” software aimed at improving self-driving capabilities, and the company has offered “Full Self Driving” software upgrades. Martinez-Olguin stated that some of the challenged statements made by Tesla and Musk were not necessarily untrue, and others could be excused because they pertained to future expectations for the technology. She also mentioned that Musk’s “hands-on” management did not imply that he knew more than he revealed, and that his nearly $34 billion profit from selling Tesla shares between February 2019 and February 2023 did not indicate that he was capitalizing at the expense of other shareholders.
Shareholders alleged that Musk, the world’s richest person, received approximately $39.4 billion from those stock sales, which is roughly equivalent to Vermont’s gross domestic product. Lawyers representing the shareholders did not immediately respond to requests for comment. Similarly, Tesla did not immediately respond to similar requests. The judge dismissed the lawsuit without prejudice, which means that shareholders have the option to amend it. Despite this legal victory, Tesla is still under investigation by the U.S. Department of Justice and the U.S. Securities and Exchange Commission, as well as facing a case by the California Department of Motor Vehicles, regarding its self-driving claims. The case is Lamontagne v Tesla Inc et al, U.S. District Court, Northern District of California, No. 23-00869.
