U.S. prosecutors are investigating whether Tesla may have misled investors and consumers about its electric vehicles’ self-driving capabilities, potentially committing securities or wire fraud. Sources familiar with the situation told Reuters that Tesla’s Autopilot and Full Self-Driving systems offer assistance with steering, braking, and lane changes, but the vehicles are not fully autonomous. Despite warnings to drivers to remain ready to take control, the Justice Department is scrutinizing statements by Tesla and CEO Elon Musk suggesting the cars can operate autonomously.
Investigators are looking into whether Tesla misled consumers about its driver-assistance systems, possibly committing wire fraud. They are also investigating whether Tesla deceived investors, possibly committing securities fraud. The Securities and Exchange Commission is examining Tesla’s representations about driver-assistance systems to investors.
The investigation stems from reports of numerous crashes, including fatal ones, involving Teslas with Autopilot engaged. Reuters initially reported the U.S. criminal investigation into Tesla in October 2022 and now provides the first information about the specific criminal liability being examined by federal prosecutors.
Tesla has not responded to requests for comment. The company did disclose in a filing last October that the Justice Department had requested information about Autopilot and Full Self-Driving. The Justice Department did not provide comments on the investigation.
The probe, which is not evidence of wrongdoing, could lead to criminal charges, civil sanctions, or no action. Prosecutors are still in the process of reviewing extensive documentation provided by Tesla in response to subpoenas.
Reuters could not confirm which specific statements prosecutors are reviewing as potentially illegal. Musk has aggressively promoted Tesla’s driver-assistance technology for nearly a decade. Tesla’s website features videos showcasing the technology, with captions indicating the person in the driver’s seat is present for legal reasons and not actively controlling the car.
A Tesla engineer testified in 2022 during a lawsuit over a fatal crash involving Autopilot, stating that a video from October 2016 showed the technology’s potential but did not accurately represent its capabilities at the time. Despite this, Musk shared the video on social media, describing how a Tesla could navigate urban streets to highways and find a parking spot independently.
In 2016, Musk claimed Autopilot was “probably better” than human drivers, and in an October 2022 call, he spoke of an upcoming FSD upgrade that would allow customers to travel to various destinations without touching the wheel.
Musk’s focus on self-driving technology continues as Tesla’s car sales and profits decline. The company recently cut costs through mass layoffs and postponed plans for a long-awaited $25,000 model.
Musk remains optimistic about self-driving technology, stating in April that pursuing autonomy is a logical strategy. Tesla’s shares saw an increase in late April after Musk’s visit to China led to progress in gaining approvals to sell FSD there.
Musk has promised self-driving Teslas for nearly a decade. In 2022, Tesla’s lawyers argued that failure to achieve a long-term goal is not considered fraud.
Prosecutors face legal challenges in their investigation, needing to prove Tesla’s claims crossed the line from acceptable salesmanship to deliberately false statements harming consumers or investors.
Courts have previously ruled that “puffery” or corporate optimism doesn’t constitute fraud. In 2008, a federal appeals court found that optimistic corporate statements alone do not demonstrate intentional deception of investors.
Justice Department officials will likely seek internal communications from Tesla to find evidence that Musk or others knew they were making false statements. This could be challenging, but the risk of overselling self-driving systems raises the seriousness with which the statements would be treated.
Tesla’s claims about Autopilot and FSD have faced scrutiny in regulatory investigations and lawsuits. Regulatory and court concerns have emerged regarding the brand names Autopilot and Full Self-Driving, which may give customers a false sense of security.
In April, the Washington State Patrol arrested a man for vehicular homicide after his Tesla, using Autopilot, struck and killed a motorcyclist while the driver was distracted. A probable-cause statement indicated the driver admitted to inattention while trusting the vehicle to drive itself.
In Washington state, drivers remain responsible for operating their vehicles safely, regardless of the technological capabilities. Meanwhile, the National Highway Traffic Safety Administration is investigating whether Tesla’s recall of over 2 million vehicles adequately addressed Autopilot safety issues.
The NHTSA’s investigation revealed a significant safety gap between drivers’ expectations of Tesla’s technology and its actual capabilities, leading to potential misuse and avoidable crashes.
