The lawsuit, filed on Monday in San Francisco federal court, was led by Tesla shareholder Thomas Lamontagne. The plaintiffs claim that Tesla’s self-driving technologies posed a “serious risk of accident and injury” and that Musk and Tesla made misleading statements to conceal this fact.
The investors cited investigations by the National Highway Traffic Safety Administration (NHTSA) and the Securities and Exchange Commission (SEC) into Musk’s claims about Autopilot. They also referred to a recent NHTSA recall of more than 362,000 vehicles equipped with Full Self-Driving (FSD) software due to a possible safety issue at intersections. Although Tesla agreed to the recall, it disagreed with the safety authority’s analysis.
The investors alleged that the value of their shares fell multiple times as investigations cast doubt on the effectiveness of Tesla’s Autopilot and FSD systems. Tesla share prices fell 5.7% on February 16, equivalent to a $38.6 billion loss in value, after the announcement of the FSD recall campaign.
The complaint reads, “As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s common stock, plaintiff and other class members have suffered significant losses and damages.”
Tesla and Elon Musk are already facing legal challenges from multiple directions, including a lawsuit by six US companies alleging that Musk’s acquisition of Twitter failed to pay them. This has further raised concerns among Tesla shareholders who had already expressed alarm over Musk’s divided attentions when he acquired Twitter.
It remains to be seen how this latest lawsuit will impact Tesla’s ongoing legal battles, but the company and Musk are expected to face significant legal bills in the near future.