Tesla is being investigated for securities and wire fraud
Tesla CEO Elon Musk at the Milken Institute’s Global Conference at the Beverly Hilton Hotel, on May 6, 2024 in Beverly Hills, California.
Tesla CEO Elon Musk at the Milken Institute’s Global Conference at the Beverly Hilton Hotel, on May 6, 2024 in Beverly Hills, California.
Elon Musk’s comments about Tesla’s self-driving technology has landed him in hot water with the feds — again.
Reuters, citing unnamed sources familiar with the matter, reports that the Department of Justice is examining whether Musk and Tesla’s comments about the company’s Autopilot and Full Self-Driving (FSD) technology constitute securities fraud or wire fraud. Investigators are looking into whether Tesla committed wire fraud by misleading consumers about the technology and whether Tesla committed securities fraud by deceiving investors, Reuters reports.
Although the fine print on Tesla’s website mentions that driver intervention is needed — and past versions of the technology have insisted that drivers keep their hands on the wheel — Musk has suggested the electric vehicles can drive themselves. Tesla’s driver assistance technology is not fully autonomous.
The Justice Department first began probing Tesla over its self-driving claims in October 2022. Tesla in January 2023 informed investors that the department had asked it for information related to FSD and Autopilot. The probe, Reuters reports, is still in the early stages, partly due to the “voluminous” documents Tesla provided.
Tesla stock dropped almost 3% in Wednesday morning trading after Reuters’ initial report.
Musk has been a major proponent of Tesla’s technology for more than a decade, although he has often fallen short of his promises.
Musk has described himself as the “boy who cried FSD” and, during an October 2022 earnings call, promised that an upgrade to the technology would allow consumers to travel “to your work, your friend’s house, to the grocery store without you touching the wheel.”
In 2020, Musk told a crowd in Shanghai that he remains “confident” that Tesla will achieve “basic functionality for level five autonomy this year,” referring to the SAE’s rankings of autonomy. Tesla’s technology, in 2024, is still at level 2.
A 2016 video released by Tesla infamously included someone saying “The person in the driver’s seat is only there for legal reasons. He is not doing anything. The car is driving itself.”
Comments like those have opened Tesla up to more than a dozen lawsuits over the technology, which has been accused of misleading consumers and inspiring drivers to be more laidback about watching the road. The Securities and Exchange Commission is also investigating Tesla’s claims about its technology, Reuters reports.
Tesla has been accused of false advertising by California’s Department of Motor Vehicles and investigated by the state attorney general’s office over its marketing practices. The National Highway Traffic Safety Administration (NHTSA) has linked Autopilot to more than 200 crashes and 29 deaths and opened more than 50 special crash investigations into Tesla vehicles thought to be linked to Autopilot.
The NHTSA has given Tesla a July 1 deadline to answer questions related to its December recall of more than 2 million EVs over an issue with Autopilot’s software. In December, Tesla said Autopilot’s controls “may not be sufficient to prevent driver misuse” and could increase crash risks.
The U.S. Department of Justice and the Securities and Exchange Commission said in a statement to Quartz that it “does not comment on the existence or nonexistence of a possible investigation.” A representative for Tesla did not immediately return a request for comment.
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