Tesla and its CEO Elon Musk are being sued by company shareholders over allegations of securities fraud, according to a class-action lawsuit filed in federal court on Monday, August 4, in Austin, Texas.
The proposed lawsuit focuses on the rollout of Tesla's Robotaxi service, which underwent its first public test in Austin in early June. Shareholders claim that Musk grossly understated the level of risk associated with the initial run of Tesla's self-driving vehicles, citing instances of speeding, sudden braking, driving over curbs, and even dropping passengers off in the middle of the road.
A press release from Pomerantz Law Firm, which is representing Tesla's suing shareholders, explains that the startup electric vehicle manufacturer used these inflated autonomous driving claims to inflate its business prospects and stock price. The complaint cites articles from Bloomberg and the International Business Times as publicized proof of Tesla's dangerous autonomous vehicle test, with a heavy emphasis on the National Highway Traffic Safety Administration's curiosity about the test. Indeed, the federal safety watchdog was reportedly in contact with Tesla following the June 22 test, which geo-fenced autonomous testing to a 10-mile square of Austin.
"Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Tesla overstated the effectiveness of its autonomous driving technology; (ii) there was thus a significant risk that the Company's autonomous driving vehicles, including the Robotaxi, would operate dangerously and/or in violation of traffic laws; (iii) the foregoing increased the likelihood that Tesla would become subject to heightened regulatory scrutiny; (iv) accordingly, Tesla's business and/or financial prospects were overstated; and (v) as a result, the Company's public statements were materially false and misleading at all relevant times," the release reads.
The litigious shareholders are seeking unspecified damages for those who bought into $TSLA between April 19, 2023, and June 22, 2025. This suit came just after Tesla was held liable for a 2019 crash that killed Miami-resident Naibel Benavides Leon due to an alleged Autopilot malfunction. A federal judge in Miami ordered the automaker to pay the family of the deceased $329 million in a landmark decision that serves as the first time Tesla has been held liable for the fallout of an Autopilot-related incident.
Tesla has claimed it was planning to start a Robotaxi-style service in San Francisco soon, but it's latest version of this ride share service is simply a chauffeured Tesla ride in the newest Model Y due to missing permits for autonomous operation. Musk has also expressed interest in expanding its Robotaxi service to New York, Arizona, Florida, Nevada, and other parts of Texas.
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