Tesla and its CEO Elon Musk on Monday won dismissal of a shareholder lawsuit alleging misleading statements about self-driving capabilities that popped up its stock price. Although Tesla still faces numerous other complaints and regulatory investigations of its marketing.
Musk declared in April that Tesla is “going balls to the wall for autonomy” while committing the car maker to a next-generation, self-driving vehicle concept called the robotaxi. The billionaire entrepreneur has touted autonomy for over a decade, and has persuaded customers to pay thousands of dollars for its Full Self-Driving, or FSD, feature.
Tesla cleared lawsuit for self-driving vehicle
U.S. District Judge Araceli Martinez-Olguin in San Francisco said shareholders failed to show Tesla and Musk should be liable for falsely promising they were close to delivering technology that would drive safer than humans, but that was actually “plagued with safety issues” and encouraged inattentiveness.
Tesla vehicles have included “Autopilot” software designed to enhance self-driving capabilities, and the company has sold “Full Self Driving” software upgrades.
Martinez-Olguin said some of Tesla’s and Musk’s challenged statements were not necessarily false, while others could be excused because they addressed future expectations for the technology.
She said Musk’s “hands-on” management did not mean he knew more than he let on, while his nearly $34 billion profit from selling Tesla shares in the February 2019 to February 2023 class period did not show he was cashing out at other shareholders’ expense.
Lawsuit by Tesla shareholder
Shareholders said Musk, the world’s richest person, received about $39.4 billion of proceeds from those stock sales, approximately the same as Vermont’s gross domestic product.
Investors claimed they were harmed when the truth about Tesla’s shortcomings came to light and its stock price fell, according to the complaint, which alleged that Musk sold $39 billion in stock before then.
Lawyers for the shareholders did not immediately respond to requests for comment. Tesla did not immediately respond to similar requests. The judge dismissed the lawsuit without prejudice, meaning that shareholders can amend it.
Other lawsuits on Tesla
Tesla consumers are moving ahead with a separate proposed class action over the company’s self-driving marketing, while Tesla earlier this year settled a high-profile lawsuit involving a fatal crash while Autopilot was engaged.
Tesla still faces probes by the U.S. Department of Justice and U.S. Securities and Exchange Commission, as well as a case by the California Department of Motor Vehicles, into its self-driving claims.
The case is Lamontagne v Tesla Inc et al, U.S. District Court, Northern District of California, No. 23-00869.
Tesla stock update
Share price of Tesla Inc. inched 0.45% higher to $261.63 on Monday, on what proved to be an all-around favorable trading session for the stock market, with the NASDAQ Composite Index rising 0.38% to 18,189.17 and the Dow Jones Industrial Average rising 0.04% to 42,330.15.
This was Tesla’s second consecutive day of gains.
Tesla Inc. Stock closed at $9.37 below its 52-week high of $271 which the company achieved on July 11. Tesla shares are likely to remain on watchlists after gaining 32% in the Q3, as the company prepares for a big October of potential market-moving events.
