Tesla sued by deceased driver’s family over ‘fraudulent misrepresentation’ of Autopilot safety
Tesla Supercharger stations are seen in a parking lot in Austin, Texas, on Sept. 16, 2024.
Brandon Bell | Getty Images
Tesla is being sued by the family of a driver who died in a 2023 collision, claiming that the company’s “fraudulent misrepresentation” of its Autopilot technology was to blame.
The Tesla driver, Genesis Giovanni Mendoza-Martinez, died in the crash involving a Model S sedan in Walnut Creek, California. His brother, Caleb, who had been a passenger at the time, was seriously injured.
The Mendoza family sued Tesla in October in Contra Costa County, but in recent days Tesla had the case moved from state court to federal court in California’s Northern District. The Independent first reported on the venue change. Plaintiffs generally face a higher burden of proof in federal court for fraud claims.
The incident involved a 2021 Model S, which smashed into a parked fire truck while the driver was using Tesla’s Autopilot, a partially automated driving system.
Mendoza’s attorneys alleged that Tesla and Musk have exaggerated or made false claims about the Autopilot system for years in order to, “generate excitement about the company’s vehicles and thereby improve its financial condition.” They pointed to tweets, company blog posts, and remarks on earnings calls and in press interviews.
In their response, Tesla attorneys said the driver’s “own negligent acts and/or omissions” were to blame for the collision, and that “reliance on any representation made by Tesla, if any, was not a substantial factor” in causing harm to the driver or passenger. They claim Tesla’s cars and systems have a “reasonably safe design,” in compliance with state and federal laws.
Tesla didn’t respond to requests for comment about the case. Brett Schreiber, an attorney representing the Mendoza family, declined to make his clients available for an interview.
There are at least 15 other active cases focused on similar claims involving Tesla incidents where Autopilot or its FSD — Full Self-Driving (Supervised) — had been in use just before a fatal or injurious crash. Three of those have been moved to federal courts. FSD is the premium version of Tesla’s partially automated driving system. While Autopilot comes as a standard option in all new Tesla vehicles, owners pay an up-front premium, or subscribe monthly to use FSD.
The crash at the center of the Mendoza-Martinez lawsuit has also been part of a broader Tesla Autopilot investigation by the National Highway Traffic Safety Administration, initiated in August 2021. During the course of that investigation, Tesla made changes to its systems, including with a myriad of over-the-air software updates.
The agency has opened a second probe, which is ongoing, evaluating whether Tesla’s “recall remedy” to resolve issues with the behavior of Autopilot around stationary first responder vehicles had been effective.
NHTSA has warned Tesla that its social media posts may mislead drivers into thinking its cars are robotaxis. Additionally, the California Department of Motor Vehicles has sued Tesla, alleging its Autopilot and FSD claims amounted to false advertising.
Tesla is currently rolling out a new version of FSD to customers. Over the weekend, Musk instructed his 206.5 million-plus followers on X to “Demonstrate Tesla self-driving to a friend tomorrow,” adding that, “It feels like magic.”
Musk has been promising investors that Tesla’s cars would soon be able to drive autonomously, without a human at the wheel, since about 2014. While the company has shown off a design concept for an autonomous two-seater called the CyberCab, Tesla has yet to produce a robotaxi.
Meanwhile, competitors including WeRide and Pony.ai in China, and Alphabet’s Waymo in the U.S. are already operating commercial robotaxi fleets and services.
OpenAI CEO Sam Altman visits “Making Money With Charles Payne” at Fox Business Network Studios in New York on Dec. 4, 2024.
Mike Coppola | Getty Images
OpenAI said Wednesday it was working to fix an outage after its popular ChatGPT assistant and Sora video generator were left inaccessible.
“We have identified the issue and are working to roll out a fix,” OpenAI said in a post on X.
Earlier this month, OpenAI CEO Sam Altman said the company’s technology was reaching 300 million active users each week. Earlier on Wednesday, Apple released new versions of its software for the iPhone, iPad and Mac that bring integrations with ChatGPT.
ChatGPT has been down for over three hours. An outage in June lasted for over five hours.
OpenAI was valued at $157 billion in a funding round in October that included participation from existing backer Microsoft as well as chipmaker Nvidia. The company’s rapid ascent began with the launch of ChatGPT in late 2022 and has been the biggest story in the tech industry over the last couple years.
On Monday OpenAI said it was releasing Sora to people in the U.S. and most other countries, but on Tuesday, Altman wrote on X that “we significantly underestimated demand for sora; it is going to take awhile to get everyone access.”
Technology
ServiceTitan prices IPO at $71, above expected range, after slow stretch for tech offerings
Vahe Kuzoyan, left, and Ara Mahdessian, the founders of ServiceTitan.
ServiceTitan
ServiceTitan, a provider of cloud software to contractors, priced its IPO at $71 a share on Wednesday, above the expected range.
The company is set to debut on the Nasdaq on Thursday under ticker symbol “TTAN.” ServiceTitan previously raised its price range to between $65 and $67.
ServiceTitan sold 8.8 million shares in the offering, which would amount to a raise of almost $625 million. At the IPO price, ServiceTitan is worth about $6.3 billion.
Technology IPOs have been sparse since late 2021, when inflation and rising interest rates pushed investors out of riskier assets. Cloud software stocks quickly went out of favor after remote work during the pandemic had accelerated their growth.
In March of this year, social network Reddit went public, followed by data management company Rubrik the following month. In September, less than two weeks after the Federal Reserve lowered its benchmark rate for the first time since 2020, chipmaker Cerebras filed for an IPO. However, the company has yet to debut on the market.
ServiceTitan, based in Glendale, California, filed to go public on Nov. 18. The company has said some proceeds would go toward redeeming all outstanding shares of its non-convertible preferred stock. It had issued that stock in 2022 to repay loans to finance the $577 million acquisition of pest control software provider FieldRoutes.
While raising money in 2022, ServiceTitan agreed to “compounding ratchet” terms that encourage the company to quickly go public and prevent unnecessary dilution, according to an analysis from venture firm Meritech Capital.
Bessemer Venture Partners, TPG and Iconiq are among the company’s top shareholders, alongside founders Vahe Kuzoyan and Ara Mahdessian.
Mahdessian’s father had a contracting business, and Kuzoyan’s father dealt in plumbing, according to the Los Angeles Times. The founders said in a pre-recorded IPO roadshow that they saw technology as a way to modernize their family businesses. Their software can help with marketing, sales, scheduling and customer service.
ServiceTitan’s preliminary results for the October quarter show a net loss of about $47 million on $198.5 million in revenue. That suggests approximately 24% year-over-year revenue growth, the highest rate since mid-2023. But the company’s net loss widened from around $40 million in the October quarter last year.
WATCH: Many tech companies have effectively completed IPOs as private businesses, says Mitchell Green
Technology
Alphabet and Tesla reach fresh records, joining Amazon and Meta and pushing Nasdaq past 20,000
Tech stocks on display at the Nasdaq.
Peter Kramer | CNBC
Alphabet and Tesla climbed to fresh records on Wednesday, closing at all-time highs alongside Amazon and Meta as the tech megacaps lifted the Nasdaq past 20,000 for the first time.
Tech’s seven trillion-dollar companies added roughly $416 billion in market cap for the day.
For Alphabet, the two-day 11% rally was driven by the company’s launch of its latest quantum computing chip, which it revealed on Monday and described as a “breakthrough” and “an important step in our journey to build a useful quantum computer with practical applications” in drug discovery, battery design and other areas.
Alphabet closed at $195.40 on Wednesday, topping its prior high of $191.18, which it reached on July 10.
Tesla had been below its previous record for much longer. Shares of the electric vehicle maker jumped almost 6% on Wednesday to $424.77, climbing above their prior closing high of $409.97 on Nov. 4, 2021. The stock has soared 69% since Donald Trump’s election victory last month, on Wall Street’s optimism that Tesla CEO Elon Musk’s cozy relationship with the incoming president will pay dividends.
Amazon, Apple and Meta have all been regularly reaching new highs, though Apple slipped 0.5% on Wednesday. Microsoft, meanwhile, is about 4% below its high reached in July, and chipmaker Nvidia is 6% off its record from last month.
The outsized weighting of tech’s megacaps has pushed the Nasdaq to a 33% gain for the year. The index rose 1.8% on Wednesday to close at an all-time high of 20,034.89.
The market has rallied since Trump’s victory on Nov. 4, partly on expectations that the new administration will dial down regulatory pressure on the tech industry and allow for more dealmaking.
On Tuesday, Trump named Andrew Ferguson as the next chair of the Federal Trade Commission, replacing Lina Khan, who is best known for blocking the top tech companies’ acquisition efforts. Ferguson, currently one of the FTC’s five commissioners, “will be the most America First, and pro-innovation FTC Chair in our Country’s History,” Trump wrote in a Truth Social post.
Tom Lee, managing partner at Fundstrat Global Advisors, told CNBC’s “Closing Bell” that investors see more gains in tech with the expectation that a Federal Reserve rate cut is coming this month. The consumer price index showed a 12-month inflation rate of 2.7% in November, the Bureau of Labor Statistics reported on Wednesday, further solidifying the market outlook for a cut.
“We know that when interest rates fall, the megacaps actually are very sensitive to that, and I think today was a day where the odds of a December cut increased,” Lee said. “That’s actually bullish for tech.”
WATCH: What Fundstrat’s Tom Lee expects from the markets in 2025
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