Tesla, Musk Sued Over Robotaxi Safety, Alleged Traffic Violations

Shareholders have filed a lawsuit against Tesla Inc. and its CEO, Elon Musk, in federal court, alleging that the company made “materially false and misleading statements” regarding the safety of its robotaxi service and the regulatory oversight involved in launching autonomous vehicles. The lawsuit was filed Monday in the U.S. District Court, Western District of Texas, under the name Morand v. Tesla Inc. et al.

Tesla launched its robotaxi service in Austin, Texas, on June 22, 2025. While these vehicles are Model Y cars equipped with autonomous driving software, they operate within a relatively small, geofenced area and require a human “safety monitor” in the passenger seat.

Despite these precautions, several videos have emerged online showing the robotaxis exhibiting erratic behavior in Austin. The lawsuit specifically cites a Bloomberg article from June 23, titled “Tesla Robotaxi Videos Show Speeding, Driving Into Wrong Lane,” to support claims that the vehicles allegedly violated traffic laws from their initial day of operation.

The suit further references another June 23 article, “Tesla Robotaxi Incidents Draw Scrutiny From US Safety Agency,” which reported on the National Highway Traffic Safety Administration (NHTSA) contacting Tesla about social media videos depicting road safety incidents. Following these reports of issues in Austin, Tesla’s stock reportedly experienced a decline.

The legal action also highlights a Tesla earnings call in April, during which Elon Musk stated, “The team and I are laser focused on bringing robotaxi to Austin in June.” This declaration followed a reported 71% drop in the company’s profits, with Musk reiterating promises of future advancements.

Musk has a long history of making optimistic predictions about the imminent arrival of fully autonomous Tesla vehicles, often referred to as “full self-driving.” The lawsuit implicitly points to this pattern, noting that Musk continues to claim that Teslas are already capable of self-driving, as evidenced by his August 3 post stating, “Teslas can drive themselves!”

In addition to Tesla and Elon Musk, the lawsuit names Chief Financial Officer Vaibhav Taneja and former CFO Zachary Kirkhorn (who served until 2023) as defendants. The shareholder suit alleges that Taneja and Kirkhorn “enriched” themselves through “insider sales of the Company’s shares while those shares traded at artificially high prices.” The lawsuit is seeking class action status. Neither Taneja nor Kirkhorn immediately responded to requests for comment.

This lawsuit comes as Tesla faces broader challenges, including recent declining sales. The company was also recently ordered by a jury in Miami to pay $240 million in damages in a separate case involving its Autopilot technology.

It is important to distinguish the current “Robotaxi” service, which utilizes modified Tesla Model Y vehicles, from the more ambitious “Cybercab” concept. Unveiled by Musk in October 2024, the Cybercab is envisioned as a purpose-built, two-seater vehicle designed without a steering wheel or pedals, with Musk claiming it could be available in two to three years—a timeline that, given his past projections, is met with skepticism.

Tesla has also reportedly initiated a robotaxi service in San Francisco on July 31. While the California Public Utilities Commission stated that Tesla described this as an “employee-only taxi service to friends and family of employees” along with “select” members of the public, Musk has suggested on X (formerly Twitter) that the Bay Area initiative is a more extensive launch.

Tesla, which disbanded its public relations department in 2020, did not immediately respond to requests for comment regarding the lawsuit.