Tesla’s board of directors and Elon Musk are being sued by shareholders for breach of fiduciary duty over threats that the CEO made about not building AI products at Tesla, and even funneling resources to his private companies.
Just as Tesla’s board sat down for the company’s 2024 annual shareholders meeting, shareholders are suing the company, the board, and Elon Musk in a lawsuit claiming breach of fiduciary duty.
The lawsuit was filed in Delaware by the Cleveland Bakers and Teamsters Pension Fund (CB&T),
Daniel Hazen, and Michael Giampietro, on behalf of Tesla shareholders.
In the lawsuit, the shareholders argue that Musk has breached his fiduciary duties to Tesla shareholders by funding xAI, a private AI company, poaching Tesla employees, threatening not build AI products at Tesla unless given more control over the company, and for funneling resources from Tesla to his private companies.
We have extensively reported on all of these individual issues:
The shareholders are also suing Tesla’s board for not doing anything about these serious concerns.
They are seeking damages and even for Musk to give his stake in xAI to Tesla.
The company has yet to respond to the lawsuit.
Here’s the full lawsuit:
Electrek’s Take
This appears to be a very serious lawsuit and the discovery should be fascinating. However, I think they already have plenty simply from Elon’s tweets, statements and media reports.
Elon is not new to putting his foot in his mouth in tweets, but in this case, he really didn’t think before pressing post.
It’s extremely hard to argue against this being a breath of fiduciary duty, but I’ll keep an open mind to Tesla’s response.