Tesla and CEO Elon Musk are facing a shareholder lawsuit alleging they misled investors about the safety and regulatory compliance of the company’s newly launched robotaxi service. Filed in federal court on Monday, the suit claims Tesla made “materially false and misleading statements” surrounding its autonomous vehicle rollout in Austin, Texas.
Although Tesla deployed safety monitors in each car and restricted operations to a limited area, online videos have shown erratic and dangerous behavior from the robotaxis. The lawsuit points to these incidents as evidence that the vehicles violated traffic laws from day one. Investors also allege that top executives profited from insider stock sales before negative news broke, as Tesla’s stock value dropped following public scrutiny and regulatory attention.
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Shareholders File Federal Lawsuit Against Tesla and Musk
Tesla and CEO Elon Musk are facing a new shareholder lawsuit filed Monday in the U.S. District Court for the Western District of Texas. The complaint, brought by the law firm Pomerantz LLP on behalf of investor Michael Morand, alleges that both the company and its executives made “materially false and misleading statements” about the safety of Tesla’s robotaxi initiative and the level of regulatory oversight it required.
The lawsuit also names Tesla’s current CFO Vaibhav Taneja and former CFO Zachary Kirkhorn as defendants. Both are accused of profiting from insider stock sales during a time when Tesla’s stock price was allegedly inflated by misleading claims about the robotaxi program.
Robotaxi Rollout in Austin Raises Concerns
Tesla launched its robotaxi pilot service in Austin, Texas, on June 22. The service uses Tesla Model Y vehicles, equipped with autonomous driving software, operating within a geofenced area. Each vehicle includes a human safety monitor in the passenger seat—an added precaution that hasn’t stopped concerns from mounting.
Shortly after launch, videos circulated online showing the robotaxis driving erratically, including reports of vehicles speeding and veering into the wrong lane. These incidents were highlighted in a June 23 Bloomberg article titled “Tesla Robotaxi Videos Show Speeding, Driving Into Wrong Lane.”
The same day, another report revealed that the National Highway Traffic Safety Administration (NHTSA) had contacted Tesla following social media posts documenting safety-related incidents. The shareholder lawsuit references both articles as evidence that Tesla’s autonomous vehicles were allegedly violating traffic laws from the very start of their Austin operations.
Stock Volatility and Insider Sales
Following these reports, Tesla’s stock experienced a notable decline, which the lawsuit attributes to the growing scrutiny over the robotaxi program. Plaintiffs allege that Taneja and Kirkhorn benefited from selling company shares at “artificially high prices” before this negative information became public.
The suit seeks class action status on behalf of other investors who may have been affected.
Musk’s Repeated Autonomy Promises Under Fire
Elon Musk has long promised that Tesla vehicles will soon be capable of full self-driving, often issuing optimistic timelines that fail to materialize. The lawsuit references a Tesla earnings call from April, during which Musk stated, “The team and I are laser-focused on bringing robotaxi to Austin in June.” That call followed news that Tesla’s profits had plunged 71%, yet Musk continued to pitch major advancements as imminent.
Critics have noted that Musk has made similar claims for years—many of which have not come to fruition. A Wikipedia page even tracks his various failed predictions about Tesla’s autonomy roadmap. On August 3, Musk reiterated his confidence on X, formerly Twitter, writing: “Teslas can drive themselves!”
More Legal Trouble for Tesla
The robotaxi case comes amid a wave of legal challenges for Tesla. Just last week, a Miami jury awarded $240 million in damages in a lawsuit related to the company’s Autopilot system. Tesla is also facing declining sales in 2025, with public opinion shifting amid political controversies and Musk’s increasingly polarizing behavior.
What Is the Tesla Robotaxi?
Tesla’s robotaxi is a rebranded version of the Model Y outfitted with Full Self-Driving (FSD) software—not to be confused with the upcoming “Cybercab.” The Cybercab is a concept vehicle Musk unveiled in late 2024: a two-seat, steering wheel-free car designed specifically for autonomous operation. Musk has claimed the Cybercab will hit the roads in two to three years, though many analysts remain skeptical.
Quiet Launch in San Francisco Raises More Questions
In addition to Austin, Tesla reportedly began a low-profile robotaxi pilot in San Francisco on July 31. The California Public Utilities Commission told Wired that Tesla described the initiative as an “employee-only taxi service” for friends, family, and selected members of the public. However, Musk’s posts on X suggest a broader rollout may be underway.
Tesla did not respond to requests for comment. The company dismantled its public relations department in 2020, and Musk—known for his antagonistic stance toward the media—previously set an X auto-responder to reply to press inquiries with a poop emoji.
Frequently Asked Questions (FAQs)
Why are Tesla and Elon Musk being sued?
Shareholders filed a federal lawsuit alleging that Tesla and Elon Musk made false and misleading statements about the safety and regulatory readiness of their robotaxi service. The lawsuit claims these misstatements misled investors and artificially inflated Tesla’s stock price.
Where was the robotaxi service launched?
Tesla launched the service on June 22, 2025, in Austin, Texas. The vehicles are geofenced to a limited area and include human safety monitors in the passenger seat.
What issues have been reported with the robotaxis?
Multiple online videos show the robotaxis behaving erratically—speeding, swerving into the wrong lane, and failing to follow basic traffic laws. These incidents drew attention from the National Highway Traffic Safety Administration (NHTSA).
What evidence does the lawsuit cite?
The complaint references news articles, social media footage of robotaxi incidents, a notable Tesla earnings call in April, and public statements made by Musk about autonomy. It also cites stock declines and insider stock sales by Tesla executives.
Are other Tesla executives named in the lawsuit?
Yes. In addition to Elon Musk, Tesla CFO Vaibhav Taneja and former CFO Zachary Kirkhorn are named. The lawsuit alleges they profited from insider sales before the robotaxi issues became public.
Conclusion
The shareholder lawsuit against Tesla and Elon Musk marks another chapter in the growing scrutiny of the company’s autonomous driving claims. While Tesla’s robotaxi rollout in Austin was promoted as a milestone in self-driving technology, early reports of erratic behavior and regulatory attention have cast doubt on the program’s safety and readiness. Investors now allege they were misled, and that key executives benefited from inflated stock prices.
