Electric car manufacturer Tesla and CEO Elon Musk are dealing with a proposed securities fraud class-action lawsuit filed in Austin, Texas by shareholders focusing on securities fraud tied to its robotaxi service. The case alleges Tesla had overstated the performance and safety of its self-driving model and lied to investors as the company unleased a pilot program of a few robotaxis in June 2025.
The suit becomes more so following the June 22 rollout, which saw Tesla publicly testing a robotaxi in Austin and faced a huge backlash. There were reports of cars speeding, erratic braking, driving over curbs, taking the wrong lanes and even people being dropped at bang in the middle of a multi-lane road. These accidents caused people to question the National Highway Traffic Safety Administration (NHTSA) and raise issues related to safety and regulation adherence.
According to the shareholders, Musk and the top management of the company-including the CFOs Zachary Kirkhorn and Vaibhav Taneja stated “materially false and misleading statements” regarding the preparedness of Tesla on the issue of broad autonomous use. In particular, they point out how Musk promised in an April 22 earnings call that the robotaxi service would be as laser-focused on rolling out in Austin as it would be on “safe and scalable deployment across a variety of geographies.” Such utterances have become the focus of investor attention.
The backlash of the public test was immediate: the value of the Tesla stock decreased by about 6.1 per cent within 2 trades, decreasing its market capitalization by about 68 billion dollars. Shareholders claim these price decreases reinforce the financial risk that is associated with misrepresentations made by Tesla.
Adding to these pressures, Tesla was recently hit with a federal jury loss in Florida over a 2019 crash that killed two individuals that occurred as a result of its Autopilot system. A jury established that the San Jose-based company was partly responsible and instructed it to pay around 243 million dollars in damages. The case has once again raised the concern on the general claims that Tesla made about the safety of autonomous driving.
To investors, the lawsuit is more to worry about. It is alleged that between April 2023 and June 2025 Tesla deceived shareholders by concealing information regarding the safety and usefulness of its Full Self-Driving (FSD) and robotaxi features- leading to exaggerated valuation. The action is an action claiming damages over that window.
Tesla has introduced the robotaxi service in Austin where a small number of Model Y cars drive in geofenced areas. Although there was a human safety monitor in the front passenger seat, cases of accidents emerged very fast. Online videos were posted that showed irrational conduct- which led to regulators looking into it and increased investor concerns.
The company Tesla has still not made an official remark regarding the suit. The complaint is headed by the shareholder named Denise Morand and it includes the shareholder loss experienced during the time between April 19, 2023and June 22, 2025 under case Morand v. Tesla Inc. et al., pled in the Western District of Texas.
This lawsuit highlights the conflict between enormous time frame of Tesla to launch robotaxi and the safety in practice. With legal actions of some sort on the increasing regulatory pressures due to lack of required safety, the future roll-out strategies of Tesla may be burdened to a large extent. The company continues to target half the citizens in the United States with robotaxi service by the end of the year, however, now it requires regulators, the courts, and investors to observe the safety of their operations.
The Tesla and Musk are accused by shareholders of being more focused on hype as opposed to accountability. When three chief executives are listed in the case, shareholders are concerned about executive credibility and corporate governance amid the enlarging debts. Its recent efforts to migrate to AI-centered mobility technology means that this legal issue can dictate how fast and openly Tesla moves forward with its implementations in the future.
