Inspired by wars in the Middle East, climate change, the end of California’s electric vehicle mandate, and a recent divorce, Martin Eberhard and Marc Tarpenning founded Tesla in 2003, according to an interview with CNBC. Their plan was to fundamentally change the way consumers viewed electric vehicles with what became the Roadster, then eventually sell affordable mass market electric vehicles. In 2004, Elon Musk invested over $6 million of his own money into the company and became chairman of the board. In 2008, after he was ousted from the company, Eberhard sued Musk for defamation, and as part of the confidential 2009 settlement, Musk was allowed to call himself a founder. The now billionaire has served as CEO since.
These days Tesla is the top seller of electric vehicles in the United States, and globally is second to the Chinese manufacturer BYD. However, the company’s stock price seems to have little relation to the company’s reported profits. Billionaire investor Bill Gross argued that Tesla is a meme stock, and author, analyst, and critic Ed Niedermeyer said, in a podcast interview, that the company has prioritized its stock valuation over everything else.
Since 2019, the company has been involved in 486 cases in federal courts and agencies. Outside of a few case types, it is generally the defendant. As the defendant, for cases it does not settle outright, Tesla’s modus operandi seems to be to remove all litigation to federal court and then compel arbitration.
Labor
Of the 486 cases in which Tesla has been involved, 131 or 27%, have concerned labor disputes. The plurality, fifty-eight, of these suits bear the Nature of Suit code (NOS) 442 Civil Rights – Jobs. Eighteen of these cases concern alleged racial harassment/discrimination, and eleven concern alleged sexual harassment/discrimination. Including cases that bear other NOS, primarily 445 Civil Rights – Americans with Disabilities Act – Employment, Tesla has faced nineteen suits alleging discrimination based on disability or for taking family or medical leave. In Perkins v. Tesla, Inc., plaintiff Ashley Perkins alleges Tesla did nothing to provide accommodations so she could pump at work, as required by the Fair Labor Standards Act. The company faced six suits claiming discrimination and wrongful termination after the plaintiffs were injured on the job. Plaintiff Roy Jackson alleges that after he returned to work following medical leave for a workplace injury, management forced him to lift loads greater than recommended by his doctor; he re-injured himself one month after returning to work. He says he was fired while taking subsequent medical leave.
Eighteen cases concern alleged wage theft. Plaintiffs in these suits tend to claim unpaid overtime and/or that the company did not provide due breaks throughout the workday.
Since 2019, The National Labor Relations Board has initiated thirty-three investigations regarding Tesla allegedly taking action against workers for discussing working conditions and for union-busting. Information regarding these proceedings is too scant to draw any broad conclusions. As has made headlines recently, United Auto Workers president Shawn Fain filed an NLRB complaint against the company over Musk bragging to former and future president Donald Trump that he fires workers for attempting to unionize.
Tesla has faced five suits over a 2023 data breach, which exposed employee personal information. The company said that the breach occurred when two former employees misappropriated the information and violated company security protocols.
Product Liability Litigation
Since 2019, Tesla has faced eighty-five cases over cars that were allegedly delivered to the plaintiffs with unrepairable defects. Of these, 71% were removed from state court. Of those removed from state court, 37% were remanded back to state courts. 82% of these suits bear the NOS 190 Other Contract.
Using this NOS as a proxy, compared to other car companies, Tesla ranks third-most in suits over defective vehicles, controlling for 2023 sales. However, this does not necessarily indicate that Ford, Volkswagen, and Tesla deliver more allegedly defective cars than other companies. Since so many of Tesla’s cases originate in state court, other manufacturers may face as much litigation but do not move to remove them to federal court. Tesla is also unique in that it sells to customers directly instead of relying on third-party dealers.
Autopilot
Thirty six cases concern Tesla’s Autopilot. Despite Musk’s claims that their self-driving systems are “full self-driving,” Autopilot can be more accurately described as an advanced driver assistance system (ADAS), or level two autonomous, and the “full self-driving” is debatably level three autonomous. However, Tesla has faced thirty-two lawsuits over the autonomous systems malfunctioning. Some of these suits detail relatively minor, and harmless instances of sudden uncommanded acceleration; others allege more severe consequences. Eleven cases claim wrongful death on account of Autopilot. Few of these cases have resolved, though for those that have, the modal outcome is a settlement for an undisclosed sum.
An additional nine cases have been filed by plaintiffs alleging they paid extra for full self-driving, and Tesla has yet to deliver the autonomous experience they were promised. One of these suits was settled, one was dismissed based upon the statute of limitations, and the remainder are ongoing.
Battery Life
Tesla has faced thirteen suits brought by individuals alleging Tesla oversells the range on its batteries. One of these plaintiffs even alleges that the cars themselves do not accurately depict the range remaining; Alejandro Corona and Cabanillas & Associates, P.C claim that the cars initially list a range only for the “miles remaining” to precipitously drop.
Intellectual Property
Patents
Since 2019, Tesla has faced and brought 87 suits over intellectual property. In 47 such disputes, Tesla has been the plaintiff, most commonly when petitioning for inter partes review of patents on which they allegedly infringe. More broadly, 77% of all of Tesla’s intellectual property cases concern patent disputes. Twelve cases concern trademark disputes, five concern trade secrets, and two concern copyright.
The patents in question range Tesla’s entire suite of products and advertised features. Seventeen suits center around various pieces of technology underpinning Tesla’s “full self-driving.” Sixteen suits concern Tesla’s car batteries and the technology used to charge them. Thirteen concern telecommunications technology, which Tesla uses to offer customers in-vehicle wifi. Three suits center around steering technology to prevent rollover.
Trademarks
As to the trademark disputes, six suits mirror the trend in the Northern District of Illinois; Tesla alleges dozens of companies are counterfeiting its products. Two concern aftermarket suppliers that Tesla argues deceive customers into thinking that the parts are official Tesla manufacture.
Four trademark cases involve disputes over North American Charging System (NACS) adapters. The NACS standard was originally developed as Tesla’s proprietary charger for the Model S; however, in 2014 the European Union mandated that all EV chargers speak the same language, allowing for simple passive adapters to switch from port to port. In 2023, Ford and GM announced they would move to the Tesla charging standard, and the connector was renamed NACS. Nearly every other automaker selling in the North American market has similarly adopted NACS. In the aforementioned suits, Tesla alleges the defendants sell dangerous NACS adaptors.
Copyright
Tesla has faced two lawsuits over the company allegedly infringing on holders’ copyright. The first is a garden-variety suit over the company allegedly using the plaintiff’s photograph without license. The second involves generative artificial intelligence (AI). On October 21, 2024, Alcon Entertainment, LLC sued Tesla for allegedly using generative AI to infringe on their copyright. According to the complaint, Tesla sought out Alcon for a license to use stills from Blade Runner 2049 at their October 10 cybercab event. However, when Alcon refused, Tesla allegedly fed the requested video stills and other art from the movie into an AI image generation tool that recreated the stills with added stylization. Alcon Entertainment alleges direct, vicarious, and contributory copyright infringement, as well as false endorsement.
Antitrust
Tesla has thrown its hat in the ring in two major antitrust disputes. On October 5, 2020, the company, along with other auto manufacturers, filed an amicus brief in support of the Federal Trade Commission’s (FTC) suit against Qualcomm, Inc. In the brief, Tesla argues that Qualcomm is playing fast and loose in licensing their standard essential patents. The company alleges Qualcomm’s actions are unfairly constraining the market for telecommunications technology. The Ninth Circuit ruled against the FTC, reversing the district court’s injunction and partial summary judgment.
On August 26, 2022, Tesla sued the Louisiana Auto Dealers Association and the Commissioners of the Louisiana Motor Vehicle Commission. They allege that the Association and Commission conspired to force Tesla out of the market because of the company’s direct to consumer business model. To evidence their claim, Tesla provided numerous examples of the Association lobbying the Commission to institute new rules to thwart Tesla’s efforts to sell and service cars in the state. The district court dismissed one of Tesla’s claims, but the Fifth Circuit reversed that decision.
On March 14, 2023, Virginia Lambrix sued Tesla for monopolizing the service of their vehicles. Eight similar cases followed. The plaintiffs argue that internal combustion vehicles can be serviced at a plethora of shops, but Tesla mandates that all service must be done by their mechanics.
