Elon Musk, Tesla sued by shareholders over concealing Robotaxi risks

Tesla and Elon Musk face a shareholder lawsuit alleging fraud for hiding safety risks linked to Robotaxi and self-driving tech, following a flawed public test and a $68 bn drop in market value

Elon Musk and Tesla have been taken to court by a group of shareholders who allege the company misled them about the safety of its self-driving technology, including the much-publicised Robotaxi. The lawsuit, filed as a proposed class action on Monday, accuses Musk and Tesla of concealing serious risks associated with autonomous driving, according to a report by Reuters.

 

The legal action follows Tesla’s first public test of its Robotaxi fleet, which took place in late June in Austin, Texas. During the demonstration, vehicles were reportedly seen speeding, braking sharply, mounting a curb, driving in the wrong lane, and dropping off passengers in the middle of busy multi-lane roads.

 

Tesla’s share price fell by 6.1 per cent over the two trading sessions following the test, wiping out approximately $68 billion in market value.

Shareholders say Tesla overstated tech readiness

The lawsuit claims Musk and Tesla exaggerated the readiness and potential of their self-driving systems, inflating the company's valuation and stock price.

 

Shareholders cited remarks made during an April 22 conference call, where Musk said Tesla was “laser-focused on bringing Robotaxi to Austin in June”. On the same day, Tesla asserted its autonomous technology would allow for “scalable and safe deployment across diverse geographies and use cases”.

 

Tesla has not yet responded to media requests for comment. Also named in the lawsuit are Chief Financial Officer Vaibhav Taneja and former CFO Zachary Kirkhorn.

Robotaxi rollout central to Tesla's future

Scaling the Robotaxi service is considered vital to Tesla’s long-term strategy, particularly as demand for its core electric vehicle models slows and Musk’s political activities continue to draw scrutiny.

 

Musk, currently the world’s richest person, has said he intends to make the Robotaxi service available to half of the US population by the end of the year. However, the company must first secure regulatory approval and prove the safety of its technology.

Legal developments and fatal crash verdict

The lawsuit was filed in federal court in Austin, Texas, by shareholder Denise Morand. It seeks damages on behalf of investors who held Tesla shares between April 19, 2023, and June 22, 2025.

 

In a separate development, a Florida jury on August 1 found Tesla 33 per cent liable for a 2019 fatal crash involving its self-driving software. The accident killed a 22-year-old woman and seriously injured her boyfriend. The court ordered Tesla to pay approximately $243 million in damages. Tesla argued the driver was at fault and has said it plans to appeal the ruling.