Tesla shareholders sue company and CEO Elon Musk over Robotaxi claims

Elon Musk and

Tesla

are facing a lawsuit from the shareholders of the electric vehicle-making company. In the lawsuit, shareholders accused the EV maker and its CEO of securities fraud, alleging that the company concealed significant safety risks associated with its self-driving vehicles, including the

Robotaxi

. According to a report by the news agency Reuters, the proposed class action lawsuit was filed in the federal court of Austin, Texas. It follows Tesla's first public test of its robotaxis in late June, which reportedly showed the vehicles speeding, braking abruptly, driving over curbs, entering incorrect lanes, and dropping off passengers in the middle of multi-lane roads.

What Tesla shareholders said about the company’s Robotaxi service

As per the Reuters report, Tesla shareholders have alleged that the company exaggerated the capabilities of its autonomous driving technology, thereby overstating its business outlook and inflating its stock value. However, the company's stock declined by 6.1% across two consecutive trading sessions following the start of the test. The lawsuit aims to recover unspecified damages for investors who held shares between April 19, 2023, and June 22, 2025, Reuters added.The lawsuit comes after Musk teased the launch of Tesla’s robotaxi service in San Francisco last week. The service’s expected expansion will follow a limited pilot in Austin, Texas, where a small fleet of vehicles started operating within a geofenced area.

In San Francisco, the initial operational zone is expected to cover the broader Bay Area. Select Tesla owners have received early invitations, and the launch has reportedly also been moved up.Expansion plans for this service even include states like Nevada, Arizona, and Florida, but broader deployment depends on obtaining regulatory approvals. In California, Tesla has yet to complete the permit process required for full driverless services, with state agencies emphasising safety evaluations.The service is said to be introduced on an invite-only basis that will allow Tesla to manage safety, collect data, and meet compliance standards. This phased approach reflects the company’s cautious strategy amid regulatory and technical challenges.