Tesla, Musk Sued By Shareholders Over Self-Driving Safety Concerns

Tesla (TSLA) and CEO Elon Musk were sued on Monday by shareholders who claimed they exaggerated the effectiveness and safety of their electric vehicles' Autopilot and Full Self-Driving technologies. In a proposed class action filed in federal court in San Francisco, shareholders claimed Tesla defrauded them over four years by making false and misleading statements that concealed how its technologies, suspected of being the cause of multiple fatal crashes and created a serious risk of accident and injury.

They claimed that Tesla's stock price dropped several times as the truth became public, including after the National Highway Traffic Safety Administration began investigating the technologies and reports that the Securities and Exchange Commission was looking into Musk's Autopilot claims. On Feb. 16, the stock dropped 5.7% after the NHTSA ordered the recall of more than 362,000 Tesla vehicles equipped with Full Self-Driving beta software due to the risk of collisions at intersections.

Tesla has stated that it has agreed to the recall, despite disagreeing with the NHTSA's analysis. "Plaintiff and other class members have suffered significant losses and damages as a result of defendants' wrongful acts and omissions, and the precipitous decline in the market value of the Company's common stock," the complaint stated. Tesla, which does not have a media relations department, did not respond to requests for comment right away.

The lawsuit, filed on Monday by shareholder Thomas Lamontagne, seeks unspecified damages for Tesla shareholders from February 19, 2019 to February 17, 2023. Also named as defendants are Chief Financial Officer Zachary Kirkhorn and his predecessor Deepak Ahuja. Tesla's stock closed Monday at $207.63, up $10.75, or 5.5%, but the stock has lost roughly half its value since peaking in November 2021.

Musk is expected to promote Tesla's artificial intelligence capabilities and plans to expand its vehicle lineup at the company's March 1 investor day.