Investors who claimed that Tesla Inc. and its CEO Elon Musk overstated the efficacy and safety of its electric vehicles' Autopilot and Full Self-Driving technology filed a lawsuit against them on Monday.
Shareholders claimed Tesla defrauded them over a four-year period with false and misleading statements that concealed how its technologies—suspected as a potential factor in a number of fatal crashes—"created a serious risk of accident and injury" in a proposed class action lawsuit filed in federal court in San Francisco.
Once the National Highway Traffic Safety Administration started looking into the technology and there were rumours that the Securities and Exchange Commission was looking into Musk's Autopilot claims, they claimed Tesla's share price dropped many times as the truth came to light.
On February 16, the NHTSA was obliged to order the recall of more than 362,000 Tesla vehicles with Full Self-Driving beta software because they might not be safe to drive through intersections. This caused a further 5.7% decline in the stock price.
Tesla claims to have agreed to the recall even though it disagrees with the NHTSA's findings.
Requests for comment from Tesla, which lacks a public relations division, were not immediately fulfilled.
Thomas Lamontagne, a shareholder, filed a complaint on Monday on behalf of Tesla shareholders for losses sustained between February 19, 2019, and February 17, 2023. Zachary Kirkhorn, the chief financial officer, and Deepak Ahuja, his predecessor, are also accused.
Tesla's stock price increased $10.75, or 5.5%, on Monday to settle at $207.63. Nonetheless, the company has lost roughly half of its value from its peak in November 2021.
At Tesla's investor day on March 1, Musk, the second-richest person in the world, is anticipated to highlight the company's use of artificial intelligence and its future expansion ambitions.
Lamontagne v. Tesla Inc. et al. is the case, and the case number is 23-00869 in the Northern District of California.