Why Elon Musk, Tesla have been sued in the US
What's the story
A Tesla stockholder has sued the electric vehicle manufacturer and its CEO Elon Musk for securities fraud. The lawsuit, filed in Texas, accuses them of making false and misleading statements about the safety of their robotaxis. It also alleges that they downplayed the regulatory scrutiny involved in deploying autonomous vehicles in the country.
Service
Robotaxis still need human safety monitor
Tesla launched its robotaxi service in Austin on June 22. However, these vehicles still need a human safety monitor in the passenger seat and are restricted to a small, geofenced area of the city. The lawsuit highlights Musk's public statements about Tesla's software being a "generalized solution," unlike Waymo's "very localized" approach.
Promises
Musk's predictions about full autonomy
In 2023, Musk had promised that "the trend is very clearly toward full self-driving, toward full autonomy." However, Tesla has not yet delivered a fully autonomous system that doesn't need human supervision. The lawsuit also points out Musk's bold claim in January 2025 about launching "unsupervised Full Self Driving as a paid service in Austin in June," with "no one in the car."
Competitive landscape
Waymo ahead of Tesla in autonomous vehicle race
While Tesla has struggled to meet its deadlines, Waymo has raced ahead. The Google-backed company now provides driverless rides without safety drivers in several cities, leaving Tesla behind in the autonomous vehicle race. Despite Tesla's safety claims, multiple videos online have shown its robotaxis behaving erratically in Austin.
Safety concerns
Lawsuit cites Bloomberg report on robotaxis
The lawsuit cites a Bloomberg article titled "Tesla Robotaxi Videos Show Speeding, Driving Into Wrong Lane," which reported that the vehicles were breaking traffic laws from day one. Another report, "Tesla Robotaxi Incidents Draw Scrutiny From US Safety Agency," revealed that the National Highway Traffic Safety Administration (NHTSA) contacted Tesla after social media videos raised safety concerns.
Market reaction
Tesla stock affected by news of incidents
The news of these incidents has affected Tesla's stock price. The lawsuit was filed on behalf of shareholders who held Tesla stocks between April 19, 2023, and June 22, 2023. It seeks damages for the shareholders during this period. The case is Morand v/s Tesla Inc et al, US District Court, Western District of Texas, No. 25-01213.