Tesla and Elon Musk Sued by Shareholders Over Alleged Misleading Claims About Robotaxi Safety and Regulatory Compliance

Tesla and CEO Elon Musk are facing a shareholder lawsuit filed in federal court over the company’s rollout of its robotaxi service. The suit, brought by Pomerantz LLP in the U.S. District Court for the Western District of Texas, alleges that Tesla and its top executives made materially false and misleading statements about the safety and regulatory compliance of the robotaxi program. The lawsuit, named Morand v. Tesla Inc. et al., centers on Tesla’s launch of the robotaxi service in Austin, Texas, on June 22. Despite the presence of a human safety monitor in the passenger seat and geofencing to a limited area, multiple videos have surfaced showing the autonomous vehicles behaving erratically—speeding, drifting into wrong lanes, and failing to respond appropriately to traffic signals. These incidents prompted scrutiny from the National Highway Traffic Safety Administration, which contacted Tesla after a June 23 Bloomberg article highlighted the safety concerns. The suit references Tesla’s April earnings call, where Musk declared the company was “laser focused” on launching robotaxis in Austin by June, despite reporting a 71% drop in profits. The lawsuit argues that Musk’s repeated promises of full self-driving capability—despite a history of missed deadlines and overpromising—created an artificial sense of confidence in the company’s technology. Musk has frequently claimed Tesla vehicles can drive themselves, even as evidence suggests they are far from fully autonomous. The suit also targets Tesla’s former and current CFOs, Zachary Kirkhorn and Vaibhav Taneja, alleging they profited from insider sales of company stock while it traded at inflated prices due to misleading statements. The case seeks class action status, representing investors who may have been misled by the company’s public statements. Tesla’s broader challenges include declining sales, partly attributed to Musk’s political affiliations, controversial public behavior—including Nazi-style salutes during the January 20 inauguration—and the company’s ongoing legal troubles. Most recently, a Miami jury ordered Tesla to pay $240 million in damages over Autopilot-related incidents. The robotaxi service differs from the Cybercab, a concept vehicle unveiled in October 2024 that lacks a steering wheel and pedals and is expected to debut in 2–3 years—though Musk’s past timelines have proven unreliable. The current robotaxi program uses modified Model Y vehicles available to the public. Tesla reportedly began testing the service in San Francisco on July 31, though details remain unclear. The California Public Utilities Commission said Tesla described the effort as an “employee-only taxi service” for friends and family, plus select members of the public. However, Musk has publicly suggested a broader rollout on X, contradicting the official explanation. Tesla did not respond to requests for comment, a pattern consistent with the company’s reduced media engagement since eliminating its PR department in 2020.