A U.S. judge has ruled that EV maker Tesla (TSLA) will face a class action lawsuit in California from drivers who say that Elon Musk misled them for years about the self-driving abilities of Tesla’s vehicles. Indeed, the case centers on the Full Self-Driving (FSD) package, with claims that Tesla didn’t have the sensors needed for full autonomy and never successfully showed a vehicle completing a long-distance autonomous drive. Because these are issues that affected many customers in the same way, the judge decided the case could move forward as a group lawsuit.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Judge Rita Lin explained that many buyers likely saw Tesla’s marketing between October 2016 and August 2024, which included the “Autopilot” section of its website, blog posts, earnings calls, and Elon Musk’s 2016 press conference. She noted that while most automakers rely on dealers and wide-scale ads, Tesla’s direct-to-consumer model made it more likely that potential buyers visited its site and were influenced by those claims. Tesla argued that not everyone saw the statements or found them important, but the judge said Tesla’s unique marketing made this case different from most.
Interestingly, the certified class includes people who bought the FSD package during specific timeframes and chose not to be bound by Tesla’s arbitration agreement. However, the judge excluded buyers of the Enhanced Autopilot package after saying that it didn’t promise full self-driving capabilities, so Tesla’s alleged misstatements wouldn’t have affected their decisions. The case, officially titled In re Tesla Advanced Driver Assistance Systems Litigation, comes as regulators continue to investigate whether Tesla’s self-driving tech is safe, especially since it’s a key part of the company’s future robotaxi plans.
What Is the Prediction for Tesla Stock?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 14 Buys, 15 Holds, and eight Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average TSLA price target of $307.23 per share implies 7.7% downside risk.
