Tesla (TSLA) is facing a lawsuit from the family of Genesis Giovanni Mendoza-Martinez, a driver who tragically lost his life in a 2023 collision while using the EV giant’s Autopilot system. The lawsuit alleges that Tesla’s “fraudulent misrepresentation” of its partially automated driving technology contributed to the fatal crash. Originally filed in October in Contra Costa County, the lawsuit was recently moved to federal court in California’s Northern District.
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The incident involved a 2021 Tesla Model S sedan colliding with a parked fire truck in Walnut Creek, California, while the driver was using Tesla’s Autopilot technology. Mendoza’s brother, Caleb, a passenger in the vehicle, sustained serious injuries. The family’s attorneys claim that Tesla and its CEO, Elon Musk, have long exaggerated the capabilities of its Autopilot through tweets, blog posts, and public remarks to “generate excitement about the company’s vehicles and thereby improve its financial condition.”
TSLA Responds to the Lawsuit
Tesla, however, has denied these allegations. In its response, the company’s lawyers attributed the collision to the driver’s negligence and asserted that “reliance on any representation made by Tesla, if any, was not a substantial factor” in harming the driver or passenger. The attorneys added that the company’s vehicles and systems adhere to state and federal safety standards.
TSLA’s Autopilot Technology Is Increasingly Under Scrutiny
This lawsuit is one of at least 15 active cases involving Tesla’s Autopilot or its premium Full Self-Driving (FSD) system being in use just before a fatal accident. FSD is Tesla’s premium automated driving system, which requires an upfront payment or monthly subscription, while Autopilot is a standard option in all new Tesla vehicles.
Both systems have been under scrutiny by the National Highway Traffic Safety Administration (NHTSA), which launched an investigation in August 2021. During the NHTSA’s investigation, Tesla introduced multiple over-the-air updates and made changes to its systems. However, the NHTSA has also opened a second investigation, which is currently ongoing, to determine whether Tesla’s “recall remedy” for Autopilot’s behavior near stationary emergency vehicles is effective.
Additionally, the California Department of Motor Vehicles has sued the company, accusing it of false advertising regarding its Autopilot and FSD capabilities.
Is Tesla a Buy, Sell, or Hold?
Analysts remain sidelined about TSLA stock, with a Hold consensus rating based on 11 Buys, 13 Holds, and nine Sells. Over the past year, TSLA has soared by more than 60%, and the average TSLA price target of $244.88 implies a downside potential of 37.2% from current levels.
