Tesla and its CEO Elon Musk secured the dismissal of a lawsuit on Monday, which accused them of misleading shareholders about the effectiveness and safety of Tesla’s self-driving technology to inflate the company’s stock price.
U.S. District Judge Araceli Martinez-Olguin in San Francisco ruled that shareholders failed to demonstrate that Tesla and Musk were liable for overstating the technology’s capabilities.
The lawsuit centered on Tesla’s “Autopilot” and “Full Self Driving” software, which aim to enhance autonomous driving. Shareholders alleged that Tesla falsely claimed it was close to achieving self-driving technology that was safer than human drivers, despite ongoing safety concerns and accidents.
However, the judge found that some of the challenged statements were not necessarily false, and others were deemed aspirational, relating to future expectations for the technology.
Judge Martinez-Olguin also dismissed the argument that Musk’s management style or his $34 billion profit from stock sales indicated that he had been cashing out at shareholders’ expense. The court dismissed the case without prejudice, allowing shareholders the opportunity to amend their complaint.
Although Tesla won this lawsuit, the company continues to face investigations by the U.S. Department of Justice, the Securities and Exchange Commission, and California’s Department of Motor Vehicles regarding its self-driving claims. The case is Lamontagne v Tesla Inc et al, U.S. District Court, Northern District of California, No. 23-00869.
