In September, the Ninth Circuit of California heard Lamontagne v. Tesla Inc. in front of US District Judge Araceli Martínez-Olguín. The plaintiff alleged the automaker used “misleading” public statements with regard to its driver assistance technology. They insisted that overstated claims of the capabilities of Tesla’s Autopilot and Full Self-Driving technology intentionally misled shareholders in their decision-making.
Tesla’s attorneys pushed back against the accusation made by the plaintiff, arguing that Tesla and Elon Musk’s claims were impossible to prove as “deliberately reckless”. The defense included the fact that similar claims about any company’s offerings are common practice. Tesla’s attorneys even went so far as to claim that “either our investors are stupid or our CEO is stupid … or both”. The judge ultimately bought Tesla’s defense that its claims were obvious “corporate puffery” and “forward-looking statements,” dismissing the case without prejudice and allowing for future relitigation. This decision stands as the latest court victory for the automaker who also won two trials by jury in 2023 over whether its technology was to blame for vehicle crashes.
The District Judge’s decision raises questions about what constitutes “corporate puffery” and to what extent companies are responsible for the claims they make about their offerings. Tesla notably shuttered its PR department in 2020, making it the first North American automaker that technically doesn’t interact directly with the press. Likely foreseeing the automaker’s future absolving of its PR department, Musk took it upon himself to communicate on behalf of the firm, claiming in 2016 that “I really consider autonomous driving a solved problem, I think we are less than two years away from complete autonomy, safer than humans, but regulations should take at least another year”. [1] Musk also claimed that Teslas would be able to make their owners money while the vehicles were not in use through ridesharing, functioning similarly to Waymo vehicles. [2] Recently, Tesla has come under fire for the distribution of features to cars featuring the company’s “Hardware 3” compared to those equipped with “Hardware 4”. [3] Tesla and Musk’s repeated misleading advertising of the capabilities of the company’s vehicles being judged as not malicious raises questions for what constitutes misleading marketing.
Another question raised by skeptics of Tesla regards the promised specifications of vehicles queued for future release. The most recent example was the Tesla Cybertruck, a vehicle first revealed in 2019 but only delivered to customers for the first time earlier this year. The Cybertruck was promised to achieve 500 miles of range and come in under $40,000 in its base form. [4] However, the first Cybertrucks were “Foundation Series” vehicles, exceeding $100,000 in sticker price. Even after significant price cuts, the Cybertruck’s current base MSRP still exceeds $80,000. Additionally, no Cybertruck, even with the newly added battery range extender, can attain a 500-mile range. Tesla is still accepting $50,000 deposits for its promised second-generation Roadster, which is claimed to be the quickest vehicle in the world, overtaking Tesla’s own Model S Plaid. An estimated delivery date is still unclear for the supercar. [5] Tesla also recently unveiled its Robotaxi, a vehicle seeking to be the first fully autonomous vehicle that also claims to charge inductively using wireless charging technology rather than through conventional charging infrastructure. Tesla’s official X account claimed that the Robotaxi can achieve 90% charging efficiency in response to skepticism from tech reviewer Marques Brownlee (MKBHD). [6] Whether the Robotaxi and Tesla’s proposed wireless charging technology will match this claimed efficiency is yet to be seen, but this raises the question of how responsible Tesla is for those who make financial decisions based on the company’s often optimistic claims. With numerous claims about range, power, performance, technology, software updates, and driver assist hardware made regularly by the company’s various social media accounts, it is plausible that some people may take Tesla’s claims about their vehicles as a reason to make a purchasing decision. With the nature of social media often pitting Tesla’s loyalists against its biggest critics, finding well-corroborated information about the company’s practices and its vehicles has become more difficult than ever. The question arises of what happens when people make unintended investments based on Tesla’s admitted overstatements about its offerings.
Though multiple court cases have found Tesla and its cars’ controversial driver assistance features not accountable for accidents or decisions made over them, the company’s actions are still hotly contested. The Attorney General of California and the United States Department of Justice maintain open investigations into the company. With Tesla being the first company selling only fully electric vehicles to achieve widespread success and diverging from the rest of the established auto industry, its behavior and verdicts about the company’s vehicles made in court will set the paradigm for the inevitable electrified future of vehicles. The decisions made by Tesla and companies like Polestar and Rivian following in its footsteps will completely determine how people see and learn about cars in the future, and every passing day opens a new window into the future. What will be made of it remains yet to be seen.
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