The $329 million verdict against Tesla by a jury in Miami last week was the last straw for several Tesla shareholders. Coupled with the widely reported misadventures of Tesla Robotaxis in Austin, Texas, recently, they have decided “Enough is enough!” and sued Tesla and Elon Musk personally for repeatedly overstating the effectiveness of and prospects for their autonomous driving technology. They claim those overstatements were designed to inflate Tesla’s financial prospects in order to boost the selling price of Tesla stock. In other words, those exaggerated claims amounted to little more than a classic “pump and dump” stock fraud scheme.
According to Business Insider, the proposed class action lawsuit was filed in federal court in Texas on August 4, 2025. It says Tesla misled investors, failed to disclose problems with its oft delayed robotaxi service, and “overstated the effectiveness of its autonomous driving technology. There was thus a significant risk that the Company’s autonomous driving vehicles, including the Robotaxi, would operate dangerously and/or in violation of traffic laws.” In addition to naming Tesla and Musk, the lawsuit also names Zachary Kirkhorn, who served as Tesla CFO until 2023, and the current CFO, Vaibhav Taneja, as defendants.
Tesla Robotaxi Woes
In June, Tesla began operating a small fleet of Model Y Robotaxis in Austin, Texas. Before the service began, Elon Musk said the company was being “super paranoid” about safety. Neighbors in the geofenced area where those cars were scheduled to operate reported the cars going around and around constantly, apparently in an effort to accurately map the roads they would travel on.
That should have been a clue right there. Musk has insisted that his Full Self Driving System was capable of safely operating vehicles in areas that have not been mapped. He tended to snicker up his sleeve at other companies — particularly Uber and Waymo — that were afraid to let their autonomous vehicles loose in the wild to fend for themselves. Musk suggested that neither snow nor rain nor heat nor gloom of night would stay his Robotaxis from the swift completion of their appointed rounds.
And yet, after all that preamble, all the paranoia, all the poems, and prayers, and promises, on the very first day in operation, despite hand-picked “friends of Tesla” as passengers, those Robotaxis stumbled and bumbled their way around Austin like frigates in a full gale, driving in lanes reserved for oncoming traffic, dropping passengers off in the middle of busy streets so they had to cross multiple lanes of traffic to get to the curb, and doing a host of other things that belied the promises made by the great and powerful Musk.
Bear in mind that despite those assurances, the Robotaxis had human nannies along to take over control of the cars if they did something really stupid, and there were a number of incidents when their intervention was required. Then there was the constant barrage of buffoonery by Musk, who delights in antics that we might expect from an eight-year-old — the dick jokes and references to drugs that apparently appeal to his sophomoric sense of humor but are just stupid reminders that Musky McMuskface is more of a cosmic joke than a serious business leader.
Forbes Weighs In On Robotaxis
In an article published on August 6, Forbes says it is one thing that Elon Musk has repeatedly declared that he was “certain” or “extremely confident” that Tesla was on the verge of releasing an unsupervised self-drive system, but quite another that over the course of over eight years he has done the same thing over and over again. “He simply has no ability to judge the readiness of the project, or is not truthful with what he knows. If, some day, he turns out to be right, it will be in the way that a stopped clock is right.”
Forbes says what is most concerning is how Tesla hides information or provides misleading information. It would be best if Tesla and other autonomous driving companies “released their statistics on actual safety performance over millions of miles. They have that data, but won’t reveal it. Waymo has released some, and Cruise also released smaller amounts, though all release only what they feel they want to. All companies (except Tesla) release what the government rules require, but the rules are vague enough that these reports are often massaged in a way that makes them less useful. Tesla simply astonishingly declares they are not testing self-driving vehicles in California and so they don’t have to report.”
“This is particularly the case when operating or testing with a safety driver/supervisor. A supervisor prevents mistakes by the system from causing a problem, and so from the outside, you can’t tell apart systems that have incidents every trip, ever 10 trips, every 100 trips or even every 10,000 trips (which is a level you must exceed to consider removing the supervision.) Statistics to reveal where on that very long journey a system is are what the outside world needs.
“This leaves the public in a quandary. Many fear Tesla makes statements and does demonstrations primarily for publicity. Since Tesla’s CEO can’t reliably evaluate the state of his own projects, it does us no good to say that their actions reveal their internal thinking. Their internal thinking has never been right!”
Cry Musk!
The shareholders are claiming that the actions by Tesla and Musk cost them money, which of course is the ultimate sin among investors. So now the wolves of Wall Street are crying “Musk!” Where this suit goes from here is uncertain. First the court must decide whether to certify the requested class — which it may or may not do. If it does not, the suit goes away and those supposedly aggrieved investors will be forced to sue individually — something they are highly unlikely to do since the cost of litigation is so high.
The lawsuit also references the August 1 jury verdict in a Florida federal court over a deadly crash involving a Tesla that was using Autopilot on a two lane road. The jury in that case awarded damages of $329 million — $129 million in actual damages and $200 million in punitive damages. Tesla is certain to appeal the verdict.
Miguel Custodio, a personal injury attorney, told Business Insider the jury verdict put the automated driving industry “on notice. If their tech is not 1,000 percent safe or if the marketing is misleading in any way, there is serious legal and financial exposure. Everyone welcomes new technology, but not if it is at the cost of human lives.”
Custodio is correct. There is now blood in the water and the personal injury lawyers are beginning to circle. And yet the irrepressible Elon is promising that Tesla Robotaxis will be available to half of all Americans by the end of this year — with human nannies riding shotgun. And soon a Tesla will leave Los Angeles, drive itself across the country to New York City and park itself at the end of the journey without any human assistance. Any day now, Elon, any day.
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