Tesla shareholders have sued CEO Elon Musk and his carmaker as part of a proposed class action lawsuit, claiming that the billionaire had hidden significant risk with the company's robotaxis.
As Reuters reports, the lawsuit charges that Tesla's failure to clarify the risks amounts to securities fraud.
It's a major escalation, highlighting significant discontent, even among its own investors, with the way the EV maker's early testing of its long-awaited autonomous ride-hailing service has panned out.
We've come across footage of robotaxis driving twice the speed limit or down the opposing lane of traffic. We've also seen them brake erratically, and jerk the steering wheel back-and-forth.
Critics have also chastised Musk's decision to rely exclusively on visual cameras — rather than LIDAR and radar sensors, like Tesla's competitors — which they say is likely to undermine the vehicles' capabilities and potentially put passengers in danger.
Shareholders who signed onto the latest lawsuit accuse the billionaire of repeatedly downplaying these concerns and overstating the effectiveness of the company's autonomous driving tech, thereby artificially inflating the company's share price.
In January 2024, Musk had previously promised that the company would have "over a million" robotaxis on the road as soon as this year. During the company's first-quarter earnings call in April, he revised that promise, saying that "there will be millions of Teslas operating fully autonomously" by late 2026.
But given the latest lawsuit, there's growing incredulity about Musk's claims, even among those who stand to benefit from them. After all, the billionaire has an extraordinary track record of falling short of his overly ambitious predictions.
Complicating matters is a Florida judge ordering Tesla to pay about $329 million to victims of a crash involving the company's misleadingly-named Autopilot driver assistance software, a decision that could have major implications for its plans to roll out an autonomous ride-hailing service.
It's a precarious moment for the company, which has seen car sales plummet under Musk's leadership. Its revenue has plunged at an unprecedented rate, showing the company has much work to do to save its core business.
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