Shareholders of Tesla Inc TSLA sued the automaker and CEO Elon Musk on Monday, alleging that both overstated the effectiveness and safety of the company's Autopilot and Full Self-Driving technologies.
What Happened: The proposed class action lawsuit was filed in San Francisco federal court, reported Reuters.
According to the shareholders, Tesla deceived them over a span of four years by making false and misleading statements that concealed the fact that its technologies, believed to be responsible for deadly accidents, "created a serious risk of accident and injury,” according to the report.
The shareholders said due to Tesla’s wrongful acts and omissions and “the precipitous decline in the market value of the Company's common stock” the members of the class suffered “significant losses and damages.”
See Also: How To Buy Electric Vehicle (EV) Shares
Why It Matters: The plaintiff in the case is shareholder Thomas Lamontagne, who is seeking unspecified damages. Defendants also include Tesla CFO Zachary Kirkhorn and his predecessor, Deepak Ahuja, reported Reuters.
The lawsuit reportedly states that Tesla’s share price declined multiple times when the truth about Autopilot and Full Self-Driving became known and after the National Highway Traffic Safety Administration began probing these technologies.
In February, Tesla shares slid sharply after the NHTSA found that Tesla vehicles featuring FSD software presented safety challenges around intersections. Tesla then recalled 362,758 vehicles.
Price Action: On Monday, Tesla shares closed 5.5% higher at $207.63 in the regular session and gained 0.7% in the after-hours trading, according to Benzinga Pro data.
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