Court finds no wrongdoing by Tesla and CEO Elon Musk, but investigations into statements continue – UPDATE
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A lawsuit bought against Tesla and Elon Musk has found the electric car company and its CEO did not make false statements, but the car maker remains under investigation by multiple government agencies in the US.
UPDATE, Wednesday 2 October 2024: Electric vehicle giant Tesla and its CEO Elon Musk have won a lawsuit in the US over statements made about the company’s semi-autonomous driving technology.
Shareholders had accused Tesla and Musk of making public statements which allegedly overstated the effectiveness and safety of its so-called ‘Autopilot’ and ‘Full Self-Driving’ features, which they claimed were done to boost the car maker’s share price.
According to news outlet Reuters, the judge ruled the plaintiffs failed to make their case, saying some statements were not necessarily false, while others could be excused because they spoke about future expectations of the technology.
However, Tesla’s claims continue to be investigated by the US Department of Justice, the US Securities and Exchange Commission, and the California Deparmtnet of Motor Vehicles.
Our original story continues unchanged below.
Friday 10 May 2024: Prosecutors in the US are investigating Tesla over whether the company – and its CEO, Elon Musk – deceived investors by making potentially false claims, a new report alleges.
According to news outlet Reuters, the US Securities and Exchange Commission (SEC) – the equivalent of the Australian Securities and Investments Commission (ASIC) – is currently investigating whether EV brand Tesla and Musk committed securities fraud by deceiving investors.
Those exploring the matter are looking to determine whether allegedly false statements made by Tesla about ‘Autopilot’ and ‘Full Self-Driving’ systems were knowingly incorrect, or if they were merely aspirational claims based on what the technology set out to achieve.
Authorities are also said to be exploring whether there is evidence of ‘wire fraud’ – which relates to “voluntarily and intentionally [devising or participating] in a scheme to defraud another out of money … with the intent to defraud” over interstate communications.
Reuters cites two sources familiar with the matter, who claim prosecutors are “proceeding with caution”.
The criminal investigation by federal prosecutors is separate from those being conducted by the US National Highway Traffic Safety Administration (NHTSA) over allegations of steering failures, suspension defects, and accidents involving semi-autonomous driving systems.
While none of the investigations are evidence of wrongdoing by Tesla or Musk, the report claims some of the public statements by the company and its CEO could result in criminal charges or civil sanctions, if a court determines guilt.
However, in a previous court submission by Tesla lawyers, they argued: “Mere failure to realise a long-term, aspirational goal is not fraud.”
Courts in the US have ruled in the past that “puffery” and “corporate optimism” regarding public statements by companies do not amount to fraud or misleading conduct.
A case of fraud could only be brought if authorities were able to produce evidence that showed Musk and other high-ranking officials within the company were aware the claims were allegedly false when they made them.
Tesla has been contacted for comment and this story will be updated if a response is provided.
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