Tesla, Inc. has been criticized for its cars, workplace culture, business practices, and occupational safety. Many of the criticisms are also directed toward Elon Musk, the company's CEO and Product Architect. Critics have also accused Tesla of deceptive marketing, unfulfilled promises, and fraud. The company is currently facing criminal and civil investigations into its self-driving claims. Critics have highlighted Tesla's downplaying of issues, and Tesla's alleged retaliation against several whistleblowers.
The safety and quality of Tesla cars and services have been questioned. There have been hundreds of reports of sudden unintended acceleration, brake failures, and "whompy wheels" – collapsing wheels due to faulty car suspension. These safety and quality problems have been compounded by the poor wait times of Tesla's customer service. Some features such as Autopilot, Full Self-Driving beta, and Passenger Play (a feature allowing riders to play Tesla games while in motion) have been criticized for their careless deployment. Critics have noted that some Tesla cars have had poor build quality due to rushed testing, leading to a high ratio of flawed vehicles. Others criticized the company's "stealth" vehicle recalls, requiring customers to sign non-disclosure agreements.
Relationships between Musk, Tesla board members, employees, and unions have been complicated, partly resulting in a high turnover rate. Employees have reported poor treatment and policies, resulting in a high injury rate, with some having faced sexual harassment, racism, and union-busting incidents. Tesla's environmental practices, use of cryptocurrencies, and compliance with open source licenses have been mentioned by critics. Detractors also claim that Tesla and Musk's public relations activities have been used to deflect criticisms.
Musk and his company have been repeatedly accused of engaging in fraud, such as in their buyout of SolarCity, selling defective vehicles, overpromising, and posting reckless tweets. One tweet resulted in Musk agreeing to pay a fine and step down as Tesla's chairman. Proponents and opponents of Tesla consistently accuse each other of conflict of interests, believing Tesla's stock valuation is either under or overvalued.
Fraud allegations
SolarCity buyout
The so-described "SolarCity debacle" led a group of Tesla shareholders to file a lawsuit alleging Musk breached his fiduciary duties and unjustly enriched himself in Tesla's buyout of SolarCity in 2016. The shareholders claim that Musk knew SolarCity was going broke before the buyout, that Musk failed to properly recuse himself from the deal-making process, and that the deal was, in effect, a bailout of Musk's cousins Peter and Lyndon Rive. In order to gain shareholder support for the buyout, Musk unveiled the Solar Roof in October 2016, but the Solar Roof tiles that Musk displayed were later revealed to be fake. The trial was held in July 2021. The court ruled in Musk's favor in April 2022. Lawyers and legal academics criticized the ruling as a mistake. In March 2023, the ruling was appealed; a ruling from the Delaware Supreme Court is expected within 90 days.
Tesla was sued along with SolarCity in July 2018 for SolarCity allegedly firing three employees improperly after they blew the whistle on fraudulent sales records at the company. In June 2020, the lawsuit was dismissed with prejudice.
"Funding secured"
In September 2018, the U.S. Securities and Exchange Commission (SEC) charged Musk with securities fraud for his "false and misleading" statements after tweeting that he had "funding secured" to take Tesla private. The SEC also charged Tesla with failing to have adequate controls and procedures in place regarding Musk's tweets.
Musk settled the fraud charges with the SEC in 2018, agreeing to pay a $20 million fine and stepping down as Tesla's chairman. Tesla also agreed to pay a $20 million fine and put in place additional controls to oversee Musk's communications.
According to The Wall Street Journal, the SEC told Tesla in May 2020 that the company had failed "to enforce these procedures and controls despite repeated violations by Mr. Musk". A lawsuit filed in March 2021 alleges that Musk violated his fiduciary duty to Tesla by continuing to send "erratic" tweets in violation of the SEC settlement, and that the board has failed to control Musk. On April 1, 2022, a federal judge ruled that Musk "recklessly made the [2018] statements with knowledge as to their falsity". Comments made by Musk later in April 2022 disputing the factual basis of his settlement with the SEC likely violated the terms of the settlement agreement.