Tesla, Inc (NASDAQ:TSLA) shares are trading lower Wednesday following reports that U.S. prosecutors are looking into whether Tesla misled investors and customers about its self-driving technology.
What Happened: The Justice Department is examining certain statements made by Tesla and CEO Elon Musk about the company's full self-driving capabilities, according to Reuters.
Prosecutors are specifically looking into potential statements suggesting Tesla vehicles can completely drive themselves. Tesla's Full Self-Driving system offers steering assist, braking and lane change assistance, but it's not a fully autonomous system and Tesla has told drivers to remain ready to take over control of the vehicle when using the systems.
Two people familiar with the matter reportedly said the investigators will be exploring whether or not Tesla committed wire fraud by deceiving interstate communications and misleading consumers, and whether Tesla committed securities fraud by misleading investors.
Another person familiar with the matter told Reuters that the U.S. Securities and Exchange Commission is also investigating how Tesla presented its self-driving systems to investors.
The news comes after Tesla disclosed in October that the Justice Department had asked the company for information on its Full-Self Driving technology. Although the investigation is ongoing, the probe is not evidence of wrongdoing and could result in no action being taken. The report indicates that one of the sources said prosecutors are "far from deciding how to proceed."
Tesla shares had been under pressure leading up to earnings last month. Despite missing analyst estimates on the top and bottom lines, Musk downplayed the quarter and reiterated his vision for the future around AI, Full Self-Driving and robotaxis.
"If somebody doesn't believe Tesla's going to solve autonomy, I think they should not be an investor in the company," Musk said on the call. "We will, and we are."
TSLA Price Action: Tesla shares were down 3.69% at $171.24 at the time of publication, according to Benzinga Pro.
Photo: courtesy of Tesla.