These are not the best of times for Tesla CEO Elon Musk. Fresh from dealing with a stock price crisis caused by weak sales and presumed consumer apathy, he is again facing legal action from the SEC, in addition to dealing with Tesla’s weak financial situation and massive layoffs. In addition to all of this, however, it has further emerged that Musk and Tesla are facing dozens of other lawsuits and legal actions for an eye-popping variety of reasons varying from alleged drug trafficking at a Tesla facility to labor law violations, to institutional racism within the company.
Legal research platform Plainsite has revealed that Tesla and Musk have cumulatively had more than 38 Securities actions taken against them since 2010. To put that figure in perspective, the research also established that Ford Motor Company has recorded just four similar actions taken against it since 1996.
Musk’s Legal Woes
The National Highway Safety Traffic Administration (NHSTA) and the National Transport Safety Bureau (NTSB) are currently carrying out a joint investigation of Tesla’s autopilot feature following the death of a Model 3 driver in a road traffic collision in Delray Beach, Florida. It the investigation turns up anything untoward about the heavily marketed feature, that could spell the end for a huge part of what makes Tesla vehicles desirable to consumers. Unfortunately for Tesla, it gets worse – much worse.
Former Tesla security staff Karl Hanssen and Sean Gouthro have lodged a whistleblower complaint alleging that the company not only broke labor laws by spying on workers but it also willfully covered up theft and drug trafficking at its battery factory location in Sparks, Nevada. Another ex Tesla employee Marcus Vaughn also has Tesla in his crosshairs. Vaughn recently launched a class action lawsuit alleging that the company ignored reports of widespread and systemic racism from Black employees. This case, in particular, could blow up spectacularly in Tesla’s face because while the company is trying to strong-arm Vaughn into an arbitration process with a quiet payoff, Vaughn’s lawyers insist that he wants the case to be heard in court.
It will also be recalled that Musk is still facing a lawsuit filed by deep-sea diver Verne Unsworth, following his bizarre Twitter comments during the Thai cave rescue describing Unsworth as a ‘paedophile.’ Amidst all this, Tesla shareholders are also suing the company over its 2016 acquisition of SolarCity, which they say benefitted the company’s board members at the expense of minority shareholders.
Putting A Bold Face On It
Ever the alpha male, Musk has not thus far shown any indication that the situation is getting to him. He is still active on his social media pages, though he seems to restrict himself to retweeting Tesla posts and tweeting tame, prosaic soundbites plugging Tesla to his Twitter audience.
Behind the scenes, however, the story is a totally different one as Musk once again tries to force Tesla to work its way through “production hell” to deliver cars and make inroads into its scarcely realistic waiting list. CCN.com recently reported that JP Morgan believes that Musk will soon be removed at Tesla CEO as the company movesi nto its next phase of growth. If that is true, Musk certainly does not know it yet as he once again cracks the whip in hopes of getting more Model 3 deliveries with fewer resources amid mass layoffs.
While some believe that Tesla is simply priced too far out of range for the majority of the market (even including the Model 3 sedan), Musk clearly believes that Tesla can produce its way out of the current slump. Even if that were possible, increased production will not solve the growing pile of legal worries sitting on his desk in the short to medium term.
Last modified: September 23, 2020 12:35 PM