Tesla (TSLA) and CEO Elon Musk are facing a new legal challenge. Shareholders have filed a class-action lawsuit accusing them of securities fraud tied to the company’s self-driving technology, specifically its robotaxi initiative.
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.
The suit filed in federal court in Austin, Texas, claims TSLA misled investors by overstating how safe and ready its autonomous vehicles, including the robotaxi fleet, really are. Also, the company is said to have not informed shareholders about the risks involved.
The lawsuit seeks damages for investors who bought Tesla stock between April 19, 2023, and June 22, 2025, alleging that the company’s statements inflated its business prospects and share price.
The lawsuit was filed by a Tesla shareholder Denise Morand, in the U.S. District Court for the Western District of Texas. The case is titled Morand v. Tesla Inc. et al. and is being represented by the law firm Pomerantz LLP.
The lawsuit also names Tesla CFO Vaibhav Taneja and former CFO Zachary Kirkhorn, alleging they profited from insider stock sales while shares were trading at inflated prices
What Sparked the Lawsuit?
The legal action follows Tesla’s first public robotaxi test in Austin, Texas, in late June, which reportedly revealed serious performance issues. According to court filings, the vehicles were observed speeding, braking suddenly, driving over curbs, entering incorrect lanes, and even dropping passengers off in the middle of multilane roads.
These incidents led to a 6.1% drop in Tesla’s stock price over two trading days, prompting shareholders to take action.
Hurdles in Musk’s Robotaxi Dreams
Tesla’s robotaxi rollout is currently in a limited and experimental phase, with significant regulatory and technical hurdles still in play.
In addition to safety issues exposed in the first public robotaxi test, Tesla was recently fined $329 million over a fatal crash involving its Autopilot system. Together, these events have intensified scrutiny over the safety of its autonomous systems.
Legal experts warn that these setbacks could complicate Tesla’s efforts to secure regulatory approval for expanding its robotaxi service. As safety concerns mount, Musk’s vision of a driverless future may face more delays.
Meanwhile, shareholder confidence is being tested as Tesla’s valuation remains heavily tied to its autonomous ambitions.
Is TSLA Stock a Buy?
Turning to Wall Street, TSLA stock has a Hold consensus rating based on 13 Buys, 15 Holds, and eight Sells assigned in the last three months. At $305.37, the average Tesla price target implies a 0.45% downside potential. The stock has declined 17.38% over the past six months.
