According to the law firm press release, Tesla designs, develops, manufactures, and sells electric vehicles, including its flagship Model S, and electric vehicle powertrain components. The Complaint alleges that throughout the Class Period, Defendants made false and misleading statements and failed to disclose material adverse facts about the Tesla’s business, including: (1) Tesla’s statements about the Model S’s highest safety rating and its lack of prior fire incidents were materially misleading, due to undisclosed puncture and fire risks in its undercarriage and lithium ion battery pack; (2) the Model S suffered from material defects which caused the battery pack to ignite and erupt in flames under certain driving conditions; (3) Tesla’s future sales, its next generation Model X introduction, and its stock price were extremely vulnerable to the inherent risk posed by the Model S’s undercarriage and battery pack design flaws; (4) Tesla was unable to maintain a level of automobile deliveries sufficient to satisfy analyst concerns and compensate for other declining revenue streams; and, (5) as a result of the foregoing, Tesla’s public statements were materially false and misleading at all relevant times.
On October 2, 2013, a video of a Model S burning on the roadside was widely circulated, which Tesla attributed to a collision with road debris. The same day, Tesla was downgraded by an analyst who pointed to significant execution risks it faced. On this news, Tesla shares declined $12.05 per share, or more than 6%, to close at $180.95.
On October 28, 2013 a second Model S fire occurred in Mexico, which Tesla blamed on the car’s rate of speed and its crash into a tree. On this news, Tesla shares fell $7.32 per share, or more than 4.3% to close at $162.86 on October 28, 2013.
On January 7, 2014, a Motion for the appointment of Lead Plaintiff and Lead Counsel was filed. This Motion went unopposed and was thus granted by the Court during a hearing on February 14.
On April 15, 2014, Lead Plaintiff filed a Notice voluntarily dismissing an individual defendant.
Also on April 15, Lead Plaintiff filed an Amended Complaint.
On December 5, 2014, the Court issued an Opinion granting defendants' motion to dismiss, without leave to amend. The Plaintiffs appealed this Opinion to the Court of Appeals on December 19. The Court of Appeals affirmed the District Court on January 13, 2017.