Date
17 July 2019
The allegations of fraud against Tesla and CEO Elon Musk ignored the company's “repeated warnings about Model 3 production risks”, the judge said. Photo: Bloomberg
The allegations of fraud against Tesla and CEO Elon Musk ignored the company's “repeated warnings about Model 3 production risks”, the judge said. Photo: Bloomberg

Tesla, Musk win dismissal of lawsuit over Model 3 production

A federal judge in San Francisco dismissed for the second time a securities fraud lawsuit brought by Tesla shareholders alleging that the company made misleading comments about the production status of its Model 3, Reuters reports.

US District Judge Charles Breyer sided with Tesla, granting the electric vehicle company dismissal of the lawsuit brought in October 2017. Breyer dismissed the original lawsuit in August but allowed plaintiffs to file an amended one.

The lawsuit sought class-action status for shareholders who bought Tesla stock between May 3, 2016 through Nov. 1, 2017.

It said shareholders bought “artificially inflated” shares because chief executive Elon Musk and other executives misled them with bullish statements about the production ramp of the Model 3, failing to disclose that the company was “woefully unprepared” for the vehicle’s production.

Tesla argued in its defense that it had been forthcoming about challenges with Model 3 production, including repeated statements by Musk that Tesla was undergoing “production hell”.

Breyer wrote that the allegations of fraud ignored Tesla’s “repeated warnings about Model 3 production risks”.

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