Tesla Stock Returns above $400 During Legal Fight with California
Tesla stock is on the rise, but the company has started legal action against the state of California.
Quick overview
- Tesla stock rose 2.21% to $408 amid a lawsuit against California over false advertising allegations.
- California claims Tesla misled consumers about the capabilities of their 'Full Self-Driving' and 'Autopilot' features.
- Tesla is suing California after initially requesting more time to address the accusations, which they believe are unjust.
- Despite a decline in sales for 11 consecutive months, Tesla's stock price has increased, indicating investor interest.
On Tuesday, Tesla (TSLA) stock rose 2.21% to move above the $400 level just as they filed a lawsuit against the State of California over false advertising allegations.
Tesla stock is now at $408 and climbing this week even though they are in the middle of a legal dispute with California. The state alleges that Tesla used improper terms in their advertising, marking their electric vehicles as “Full Self-Driving” and as having “Autopilot.”
Tesla initially asked for more time to figure out what to do about the accusation, and California agreed to give them 90 days to deal with it. Now, Tesla has fired back and is suing the state for how they have treated their marketing. Investors may find their current stock movement interesting in light of the ongoing tussle.
Tesla Accused of Misleading Customers
The allegations made against Tesla are that they have not been truthful with consumers about the self-driving and autopilot features of their vehicles. These features indicate whether the vehicle can drive on its own in a city or rural environment or if the vehicle would require human assistance, intervention, or oversight.
According to Tesla, the FSD (Full Self-Driving) system can handle the majority of driving tasks safely. By their definition, that makes the car fully self-driving, but perhaps not in the eyes of California regulators. Tesla regularly updates its system to make them more powerful and competent.
What the State of California alleges is that these systems need constant supervision from human passengers, making them less than fully automated. If the advertising is found to be false, then California can take away Tesla’s license to manufacture and sell vehicles within the state lines.
Tesla made changes to fall in line with California’s requirements, but the issue did not stop there. California was satisfied with the outcome, but Tesla was not and summarily sued the state. Now engaged in legal action, Tesla is trying to have their false advertising claim removed entirely.
Even though sales are down for Tesla, now shown decline for 11 consecutive months, their stock price is higher today than it was last week. Analysts agree that the company has to make drastic changes and show that it has something new to offer customers for their fortunes to turn around, though.
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