Tesla, Musk Win Shareholder Lawsuit Over Self-Driving Technology

Tesla and Elon Musk won a dismissal of lawsuit, which alleged them of defrauding the company's shareholders by overstating the effectiveness and safety of the self-driving technology to inflate the price of its shares.

Investors accused Musk of selling $39 billion in shares before news about Tesla's shortcomings came to light and hit its stock price.

In a decision on Monday, U.S. District Judge Araceli Martinez-Olguin said that the shareholders were not able to prove liability on the part of Tesla and Musk for having falsely promised that they were already close to providing a technology that would be deemed as safer than humans when it comes to driving on the road, and that the product actually came with "safety issues."

In addition, the Judge said sale of Musk of his Tesla shares between 2019 and 2023 also did not show that the CEO was cashing out at the expense of shareholders

Reuters reported that the Tesla vehicles have enhanced self-driving capabilities and have also released software upgrades that make the vehicle on "full self-driving" mode.

According to Judge Martinez-Olguin, the statements of Musk and Tesla that were challenged by the complainants were not exactly false. There were also statements that were considered as expectations of what the technology could offer in the future.

The district judge who decided on the case also said that it does not follow that because Musk applied a hands-on kind of management, he already knew more than what he is actually telling them.

"Plaintiffs fail to connect Musk's hands-on management with any information that he allegedly learned rendering his statements false or misleading," wrote the judge as per Bloomberg.

The judge has dismissed the case without prejudice, hence, the complainants could still amend their complaint and refile.

One can recall that in April, Musk declared that the company is "going balls to the wall for autonomy," while standing by its commitment to make the self-driving robotaxi.

Earlier this year, the automaker also settled a lawsuit involving a crash, which happened while the Autopilot feature of the car was engaged.

Amid all these the company is facing a probe by the federal government concerning the Autopilot feature, whether defects on the system have contributed to fatal crashes. The Securities and Exchange Commission, along with federal prosecutors, are also looking into whether the company has made claims that misled the public.