A number of Tesla shareholders formally filed a case against the company and its chief executive officer Elon Musk regarding the way the safety and overall effectiveness of vehicular technologies were apparently overstated.
Led by shareholder Thomas Lamontagne, the lawsuit wants Musk and Tesla to compensate shareholders for unspecified damages incurred between February 19, 2019 and February 17, 2023. Tesla’s chief financial officer Zachary Kirkhorn and his immediate predecessor Deepak Ahuja were also named as respondents in the case.
The case (Lamontagne v Tesla Inc et al, U.S. District Court, Northern District of California, No. 23-00869) was filed at a San Francisco federal court on Monday, February 27th.
Why are Shareholders Suing the Firm?
According to those who filed the suit, Tesla defrauded its shareholders over a four-year period by concealing how its Autopilot and Full Self-driving technologies were the most probable cause behind several fatal accidents involving the company’s electric vehicles (EVs).
Musk and his associates released a number of misleading statements that gave no warning about how these technologies posed a serious risk on the road.
This point was underscored in the filed complaint which presented how Lamontagne and other shareholders experienced losses and damages due to the misstatements and wrongful acts done by Musk and his colleagues. The said misdemeanors also led to a significant decline in the value of Tesla’s common stock.
Tesla’s share price has dropped significantly since the flaws in its vehicles became apparent, particularly when the National Highway Traffic Safety Administration (NHTSA) began an investigation into the aforementioned technologies, and when the Securities and Exchange Commission (SEC) sought to confirm Musk’s claims regarding the safety and effectiveness of the Autopilot feature.
Tesla’s stock has lost around half its value since it last peaked in November 2021. However, as trading ended on the evening of the 27th, the company’s share price was up by around 5.5%, closing at $207.63.
Despite the lawsuit, it has been confirmed that Musk will be present on Tesla’s Investor Day slated for Wednesday, March 1st.
The tech mogul will be promoting the company’s latest advancements in artificial intelligence. Musk will also present his plans to expand Tesla’s vehicular lineup.
With regard to the lawsuit, however, neither Musk nor the current management team at Tesla has made any statements rebutting claims made by the plaintiffs.