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Tesla Sued Over Production Delays

On October 10, 2017, a suit was filed in the U.S. District Court for the Northern District of California against Tesla, Inc. ("Tesla" or the "Company") over an alleged nondisclosure of information about production delays for its Model 3 sedan, which resulted in a four percent drop in its stock price.

Tesla investor Gregory Wochos ("Plaintiff"), on behalf of himself and all others similarly situated, filed the suit claiming that Tesla and its executives violated the Securities Exchange Act of 1934 when they allegedly failed to disclose the manufacturing delays. According to Plaintiff, Tesla's public statements were materially false and misleading by representing that the Company was prepared for the launch of the Model 3, when, in fact, the Company had inadequate inventory of the vehicle due to production difficulties.

On October 6, 2017, the Wall Street Journal reported that some of the parts for the Model 3 were being produced by hand, leading to what Tesla referred to as a "production bottleneck," causing the Company to miss its production goals for the vehicle. Following the publication of the WSJ article, Tesla shares fell by approximately four percent. Plaintiff claims that the decline in market value was the result of Tesla's "wrongful acts and omissions," and that he and other class members have suffered significant losses and damages as a result.

The legal team at SFMS has significant experience litigating securities and class action matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier (nlussier@sfmslaw.com) or Chiharu Sekino (csekino@sfmslaw.com). We can also be reached toll-free at (866) 540-5505.

Shepherd, Finkelman, Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, and Pennsylvania. SFMS is an active member of Integrated Advisory Group (www.iaginternational.org), which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

Sources

Simpson, Dave. "Tesla Hit With Stock-Drop Suit Over Production Delays." Law 360. Last modified on October 11, 2017.

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