Investors claimed they were harmed when the truth about Tesla’s FSD shortcomings came to light and its stock price fell. (Alessia Pierdomenico/Bloomberg News)
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Tesla Inc. won dismissal of a shareholder lawsuit alleging misleading statements about self-driving capabilities propped up its stock price, though the company still faces numerous other complaints and regulatory investigations of its marketing.
Tesla CEO Elon Musk declared in April that Tesla is “going balls to the wall for autonomy” while committing the carmaker 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.
The name is a misnomer — FSD requires constant supervision and doesn’t render vehicles autonomous — but Musk has repeatedly predicted it’s on the verge of measuring up to the branding. The company is embroiled in numerous lawsuits over the feature, including from Tesla investors who claim they were misled.
In her ruling Sept. 30, U.S. District Judge Araceli Martínez-Olguín rejected shareholders’ allegations that Musk overstated Tesla’s self-driving technology with assurances that drivers could “go to sleep” in their car by 2020, among other promises. She found that some of the alleged overstatements concerned future plans, while others weren’t necessarily false.
“Plaintiffs fail to connect Musk’s hands-on management with any information that he allegedly learned rendering his statements false or misleading,” the judge wrote. However, she gave the investors until Oct. 30 to file an updated version of their complaint.
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.
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.
Meanwhile, the company faces federal probes into whether Autopilot defects have contributed to fatal crashes, as well as investigations by federal prosecutors and the Securities and Exchange Commission into whether Tesla made misleading claims about the feature to the public. Similar claims brought by the California Department of Motor Vehicles were allowed to move forward earlier this year.
The case is Lamontagne v. Tesla Inc., 23-cv-00869, U.S. District Court, Northern District of California (San Francisco).
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