Shareholders are suing Tesla and Elon Musk over autopilot safety risks after a $38 billion drop in market value, the report says.

  • Tesla shareholders are suing the electric car maker and its CEO, Elon Musk, over claims of autonomous driving capabilities.
  • The plaintiffs say the company concealed that its autonomous driving technology could cause “a serious risk of accident and injury.”
  • Tesla’s share price fell 5.7% on Feb. 16 after the NHTSA forced a recall of 362,000 vehicles due to issues related to FSD software.

Shareholders sued Elon Musk and Tesla on Monday over alleged falsehoods of the company’s self-driving capabilities, which they say hurt shareholder value, the report said.

According to documents seen by Reuters, investors led by Thomas Lamontan accuse the electric car maker of a four-year process of defrauding shareholders by misleading them that the company’s self-driving technology could pose a “serious risk of accidents and injury.”

Tesla’s autonomous driving technology is believed to have been the cause of several high-profile crashes that have forced regulators to recall vehicles.

On February 16, the National Highway Traffic Safety Administration (NHTSA) forced Tesla to recall 362,000 of its vehicles over concerns that its FSD software could lead to “unsafe” behavior at intersections. This coincided with a 5.7% drop in its share price, equivalent to a $38.6 billion drop in the company’s market value.

According to Reuters, shareholders claimed the stock drop was one of several times shareholder value was hit by the company’s self-driving claims.

“As a result of the wrongful acts and omissions of the defendants, as well as the sharp decline in the market value of the company’s ordinary shares, the plaintiff and other members of the class suffered significant losses and damages,” the lawsuit says, according to Reuters.

This isn’t the first lawsuit Musk has faced over the company’s ambitious autonomous driving technology: Drivers sued in September over similar false claims related to a 2016 ad that said FSD was “just around the corner.”

Tesla takes issue with the fact that it has committed fraud, arguing that its lofty goals simply haven’t met with success yet.

“Merely failing to realize a long-term ambitious goal is not fraud,” Tesla’s lawyers wrote in a November statement, according to CNN.

Attention to autonomous driving technologies has grown in recent months, with Tesla’s own co-founder Martin Eberhard calling it “crap.”

Tesla did not immediately respond to an Insider request for comment.

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