Electric vehicle maker Tesla (TSLA) has been slapped with a lawsuit related to a fatal Model S crash that led to the death of three people in September 2024. Last year, Tesla’s Model S, which was equipped with Autopilot and Full Self-Driving (FSD) technology, crashed on New Jersey’s Garden State Parkway, killing David Dryerman, his wife Michele, and their daughter Brooke. The news of the lawsuit comes as Tesla launched its robotaxi service in Austin, Texas, this weekend, with 10 to 20 Model Y vehicles boasting its latest driverless tech and a human valet in the front passenger seat.
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More on Lawsuit Against Tesla
According to Reuters, the lawsuit was filed against Tesla by the estates of the three individuals on Monday, seeking unspecified compensatory and punitive damages. The complaint blamed Model S’ faulty design that caused it to drift out of its lane and fail to apply the brakes automatically, leading to the crash. The lawsuit added that Tesla didn’t warn David Dryerman about the safety issues related to Model S. Musk had stated in 2016 that Tesla’s Autopilot technology was “probably better” than human drivers.
The complaint pointed out that thousands of Tesla drivers have relied on the EV maker’s Autopilot ADAS (advanced driver-assistance systems) technology, when in fact, it is “incapable of safely handling a variety of routine roadway scenarios without driver input.”
It is worth noting that under pressure from the National Highway Traffic Safety Administration (NHTSA), the Elon Musk-led company agreed to recall over 2 million vehicles in the U.S. to add safeguards to Autopilot ADAS. Tesla has earlier clarified that its features require drivers to pay full attention, with their hands on the steering wheel, and cautioned that the features do not currently make its vehicles autonomous.
Tesla Under Regulatory Scrutiny
TSLA stock jumped 8.2% on Monday, as investors cheered the much-awaited robotaxi launch in Austin.
However, Tesla faces regulatory scrutiny as videos shared online highlighted many examples that raised safety concerns, including a Tesla robotaxi moving the wrong way down a road, while another one braking hard in the middle of traffic. The NHTSA said that it is aware of these incidents and is in contact with the company to get additional information.
Tesla faces intense rivalry from Alphabet’s (GOOGL) Waymo, which has been rapidly making its mark in the autonomous vehicles (AV) space.
Is Tesla Stock a Buy or Sell?
Amid concerns about rising competition in key EV markets and weak demand, Wall Street has a Hold consensus rating on Tesla stock based on 14 Buys, 12 Holds, and nine Sells. The average TSLA stock price target of $287 indicates about 18% downside risk from current levels. Tesla stock is down about 14% year-to-date.
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