Tesla has secured a significant legal victory. A US District Court has dismissed a lawsuit that accused Tesla and CEO Elon Musk of misleading shareholders about the company’s Full Self-Driving (FSD) technology.
The plaintiffs, a group of shareholders, alleged that Tesla overstated the capabilities and timeline of its FSD system to inflate the company’s stock price, benefiting Musk during a period of significant stock sales.
However, the court ruled that the plaintiffs failed to sufficiently prove their case.
The lawsuit, filed in the U.S. District Court for the Northern District of California, claimed that Musk had made exaggerated promises about Tesla’s self-driving technology. Investors argued that these promises, such as drivers being able to “sleep in their cars” by 2020, created a misleading perception of Tesla’s progress in autonomous driving, which drove up the company’s stock price.
The shareholders further claimed that Musk capitalized on these inflated stock prices, selling $39 billion worth of Tesla shares between 2019 and 2023.
Despite these accusations, Judge Araceli Martínez-Olguín ruled in favor of Tesla and Musk, citing a lack of sufficient evidence linking Musk’s statements to fraudulent intent, according to Bloomberg. The court acknowledged that some of Musk’s statements, particularly regarding the future development of the technology, were overly optimistic but not necessarily false.
Furthermore, the judge pointed out that Musk’s management style—being highly involved in Tesla’s operations—did not mean that he had insider knowledge of problems with the FSD system that would make his statements misleading.
Importantly, the lawsuit was dismissed without prejudice, meaning that shareholders are allowed to amend their complaint and refile the case if they can present additional evidence. This leaves the door open for potential future legal action, but for now, Tesla and Musk have successfully defended against these claims.
