The crown jewel of the Elon Musk collection of exploding products remains the Tesla electric vehicle. Not so much for the car itself, but as a financial vehicle that continues to inflate his net worth… even beyond what Delaware corporate law can countenance. While Musk still requires a social media babysitter — a condition of his settlement with the feds over past securities manipulation claims — thanks to the Supreme Court’s refusal to get him out of the deal he signed, that may not be enough to save his company from another round of charges.
Failing to get out of his own legal commitments? Seems like a trend.
This time, it’s all about Tesla’s “self-driving” claims and whether its marketing claims went impermissibly far afield of reality for a car that still requires an alert human driving to jump in.
In an exclusive story, Reuters reports that the federal government is mulling a variety of responses — up to and including securities and wire fraud charges — over the self-driving claims.
U.S. regulators have separately investigated hundreds of crashes, including fatal ones, that have occurred in Teslas with Autopilot engaged, resulting in a mass recall by the automaker.
Reuters exclusively reported the U.S. criminal investigation into Tesla in October 2022, and is now the first to report the specific criminal liability federal prosecutors are examining.
Investigators are exploring whether Tesla committed wire fraud, which involves deception in interstate communications, by misleading consumers about its driver-assistance systems, the sources said. They are also examining whether Tesla committed securities fraud by deceiving investors, two of the sources said.
Before Musk responds with “I was on Wifi so it can’t be wire fraud, checkmate n00bs” or something equally as dazzling, it’s worth noting that prosecutors have not settled on anything yet according to Reuters.
To what extent did anyone rely on the autopilot claims when either purchasing or investing in Tesla? Its cachet as a car rests in its environmentally friendly traits and its cachet as a stock is… being a meme stock.
But just how far is too far when it comes to puffery? Tesla has advertised its system as an “autopilot” despite being little more than a driver assistance program. Making it less of an “autopilot” than a “computer willing to hold the wheel steady while you reach for the fry you dropped.” Tesla maintains that they’ve always seen autonomous driving as more of a long-term goal and failing to match the hype with reality doesn’t make it fraud, much like Boeing markets its product as “airworthy” and by gum, they hope to get there someday.
All thorny issues for prosecutors to hash out. For now, all the rest of us can do is take a page from Tesla autopilot users and say, “let’s see where it goes from here.”
Exclusive: In Tesla Autopilot probe, US prosecutors focus on securities, wire fraud [Reuters]
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
