Tesla and Elon Musk sued by shareholders claiming robotaxis violate traffic laws

Elon Musk and Tesla face lawsuits over robotaxis violating traffic laws with safety concerns, impacting Tesla's stock.

: Tesla shareholders have initiated a lawsuit against the EV company and Elon Musk, asserting misleading statements concerning the safety of their robotaxis. The lawsuit highlights incidents in Austin involving these autonomous vehicles breaching traffic laws, citing erratic behavior and safety violations depicted in various media. Additionally, former CFOs are accused of engaging in insider trading to profit from elevated stock prices. Despite these complications, Tesla continues launching its robotaxi service in San Francisco amid scrutiny from regulatory agencies.

Tesla and its CEO, Elon Musk, are currently facing a lawsuit from shareholders who have accused the company of making "materially false and misleading statements" regarding the safety and regulatory compliance of their robotaxis. These robotaxis, which were launched on June 22, 2025, in Austin, Texas, have been involved in several concerning incidents, including driving into the wrong lane and speeding, while still requiring a human safety monitor in the passenger seat. The shareholder lawsuit is based on reports from sources such as Bloomberg which detailed these traffic violations from the robotaxis’ first day of operation. Citing both Bloomberg and the U.S. safety agency National Highway Traffic Safety Administration (NHTSA), the suit claims Tesla’s introduction of this new service was marred with issues.

Moreover, the lawsuit named Tesla's chief financial officers, Vaibhav Taneja and Zachary Kirkhorn, as defendants along with Musk. It alleges these executives enriched themselves by selling company shares at artificially high prices before news of the problems began affecting Tesla’s stock. This legal action is seeking class-action status and brings further scrutiny on Musk's continued promises that Tesla will achieve full autonomy soon, despite his earlier failed predictions on several occasions and even statements that cars can already drive themselves.

Tesla’s launch strategy for robotaxis is facing further complications as a similar service was unveiled in San Francisco on July 31, 2025, reportedly involving only employees, friends, family, and select members of the public. This has prompted queries from the California Public Utilities Commission, but the company has yet to provide a clear response. The lawsuit is part of a turbulent year for Tesla, compounded by Musk's controversial political stances and public behaviors that have recently affected Tesla's sales and market reputation.

Additional sources, such as ABC7 News, noted that Tesla has abolished its public relations department in 2020, complicating media interactions and further fueling controversies related to its operational strategies. With Musk’s statements on robotaxis often contrasting with on-field realities, shareholders and regulators continue to carefully scrutinize Tesla’s ambitious autonomy advancements.

Latest developments suggest pressure and scrutiny on Tesla continue to mount, with Musk's predictions about autonomy being viewed with skepticism while safety agencies and shareholders wait for more formal resolutions and clarity about the road ahead for the controversial autonomous vehicle technology.

Sources: Gizmodo, Bloomberg, ABC7 News

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