Aurich Lawson | Tesla | Airplane!
There’s more bad news for Tesla. On Monday, we learned that CEO Elon Musk is continuing to slash his way through the company payroll as Tesla went through a fourth round of layoffs in four weeks. Yesterday, we discovered exactly what questions the National Highway Traffic Safety Administration wants answered about the safety of Tesla’s Autopilot driver assist. And today, it emerged that the US Department of Justice is investigating whether or not Tesla committed securities or wire fraud by making misleading statements about Autopilot and its so-called “Full Self-Driving” (FSD) option.
Reuters reported that three people familiar with the matter told it about the investigation. One of the sources also told Reuters that the Securities and Exchange Commission is also investigating Tesla’s claims about its driver assists.
Not the first time
This isn’t the first time Tesla has been accused of securities fraud. In 2018, Musk agreed to a settlement with the SEC over his infamous “funding secured” tweet that sent the company’s share price skyrocketing despite the fact that there was never actually a possibility that he would take the company private. As a result, Musk was required to step down as chairman, and both Musk and Tesla were ordered to pay $20 million in penalties, to be distributed to investors who lost money after being misled by Musk.
(However, a federal jury in 2023 sided with the CEO in a class-action lawsuit brought by investors.)
In another case, several Tesla owners filed a class-action lawsuit against the car company about “grossly exaggerated” range claims, alleging fraud and false advertising. The judge in that case ruled that the customers could not sue Tesla as a class, telling them instead that they had to pursue their cases individually via arbitration. We learned last October that the DOJ was also investigating the matter.
(Authorities in South Korea fined Tesla $2.2 million in January 2023 for misleading customers about range.)
Federal prosecutors first became interested in “whether Tesla misled consumers, investors, and regulators by making unsupported claims about its driver assistance technology’s capabilities” in 2022. Critics have regularly pointed out that even the name “Autopilot” is misleading, and there have been multiple instances of Musk demonstrating the system on camera without keeping his hands on the steering wheel, despite other Tesla literature that states drivers must do so at all times.
The CEO has also regularly claimed that Tesla is far ahead of the rest of the industry in autonomous driving technology, issuing deadlines for full autonomy that, like most of Musk’s deadlines, have come and gone without delivering the product.