Elon Musk, Tesla sued by shareholders over safety risks of Robotaxis, self-driving vehicles

AUSTIN, Texas – Tesla and Elon Musk are facing a proposed class action suit by shareholders over safety risks regarding Robotaxis.

The suit was filed on Monday, August 4, in a federal court in Austin.

The suit

What we know:

The suit claims that Tesla’s Robotaxis were operating dangerously and in violation of traffic laws. 

Shareholders are also accusing Tesla and Elon Musk of securities fraud for concealing the “significant risk” of the danger of the company’s self-driving vehicles, including Robotaxis.

The lawsuit claims that because of Musk’s statements and videos of dangerous driving, Tesla stock dropped significantly, and shareholders suffered losses.

The suit also names the current chief financial officer and the former CFO.

Throughout the years, Tesla has hosted numerous earnings calls with investors and analysts championing the technology.

“Success in AI endeavors is a function of talent, unique data and computing resources and we have outstanding capabilities in all 3 arenas,” said Musk in July 2023. “I really just don’t know how anyone could do what we’re doing, even if they had our software and had our computer, if they did not have the training data.”

The backstory:

Musk first announced the idea to build the Robotaxi back in April 2022.

“The way we are going to manufacture Robotaxi is itself a revolution, it’s a revolutionary design, a revolutionary way. It’ll be by far the highest units per hour of any vehicle production ever. So, very excited about that,” said Musk in July 2023.

“We see a clear path to full self-driving being 10 times safer than the average human driver,” he added at the time.

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In June, Tesla debuted its Robotaxi service launch in Austin, where 10 autonomous vehicles picked up invite-only passengers within a 10-mile square of Austin.

Bloomberg later reported the self-driving taxi appeared to violate traffic laws during its first day offering paid rides, with one customer capturing footage of a left turn gone wrong and others traveling in cars exceeding posted speed limits.

Safety demonstration by advocacy group

Before the launch, a safety advocacy group held a live demonstration on June 12 showing the robotaxi striking child mannequins while illegally passing a stopped school bus.

The test was run eight times using the latest version of Full Self-Driving, v13.2.9, says the advocacy group.

In the demonstration, the advocacy group says FSD illegally blew past the school bus and ran down the child mannequin on every single test. Tesla’s software also allegedly did not disengage or even alert the driver about a collision on any of the test runs.

The demonstration prompted Texas lawmakers to send a letter requesting Tesla delay its planned June 12 launch until after new legislation regarding autonomous vehicles goes into effect on Sept. 1.

What’s next:

The class action seeks unspecified damages for shareholders between April 19, 2023, and June 22, 2025.

Tesla and Musk have yet to publicly comment on the lawsuit as of Tuesday night.