Tesla and CEO Elon Musk are confronting a new legal challenge as shareholders file a class-action lawsuit in a federal court in Austin. The suit alleges that Tesla overstated the capabilities and safety of its self- driving technology service, notably after its limited launch in Austin in June 2025, where operational flaws such as speeding, abrupt braking, improper lane usage, and unsafe passenger drop‑offs were witnessed and shared online.
The complaint, led by investor Denise Morand, contends that these misleading assurances inflated Tesla’s stock, eroding market confidence when the truth emerged. Indeed, Tesla’s shares plunged nearly 6.1% shortly after the service debut, wiping away approximately $68 billion in market value .
Notably, the National Highway Traffic Safety Administration (NHTSA) is investigating the robotaxi service due to concerns over public safety.
The lawsuit names key executives—including Musk, current CFO Vaibhav Taneja, and former CFO Zachary Kirkhorn—and seeks damages for investors who purchased Tesla stock between April 19, 2023, and June 22, 2025.
This development compounds recent legal woes for Tesla, which recently lost a $243 million verdict linked to a fatal Autopilot crash. The latest action raises fresh questions about the readiness of Tesla’s autonomy claims and their financial consequences.
Feature photo source: MotorTrend
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