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 in the past 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 criticize 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 conflicts of interest, believing Tesla's stock valuation is either under- or over-valued.
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. Some lawyers and legal academics criticized the ruling as a mistake and vulnerable to appeal. In June 2023, Delaware's Supreme Court upheld the ruling.
"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 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.
Accounting In 2017, a lawsuit alleged Tesla made materially false and misleading statements regarding its preparedness to produce Model 3 cars. The U.S. Department of Justice also began an investigation in 2018 into whether Tesla misled investors and misstated production figures about the Model 3. The lawsuit was dismissed in Tesla's favor in March 2019.
In 2018 Francine McKenna, investigative journalist and lecturer in accounting at Wharton, claimed Tesla made use of new revenue recognition accounting rules (adopted 1 January 2018) to post a first-quarter revenue beat. The new rules allow cars leased through its leasing partners to generally qualify to be accounted for as sales with a right of return, rather than operating leases, allowing an accelerating recording of revenue for Tesla. In May 2018, Tesla reported a final adjustment of $623 million to its cumulative earnings resulting from the revenue recognition change.
In November 2019, hedge fund manager David Einhorn accused Elon Musk of "significant fraud" and in April 2020, questioned Tesla's accounting, in particular their large accounts receivable balance. Musk responded on X (formerly Twitter) to Einhorn's claims with a kissing-face emoji and attached a letter signed "Treelon Musk" containing "...It is understandable you wish to save face with your investors ... [and] desire to feel somehow relevant with your Tesla short position." In the same letter, Musk promised to send Einhorn "a small gift of short shorts". Einhorn later received a package of shorts from Musk but Einhorn noted they came with "some manufacturing defects". Later, in 2020, numerous reporters and financial analysts speculated that Tesla could be the next Wirecard scandal.
The SEC received a whistleblower complaint in 2021 from former Tesla employee Lukasz Krupski detailing numerous allegations that Tesla "may have violated securities law and flouted accounting standards." The SEC looked at one portion of the complaint, then closed the investigation without interviewing the submitters or evaluating the 18,000 files of documentation. As reported first by Handelsblatt, Krupski then leaked the so-called Tesla Files, leading to court injunctions and warnings from the corporation. Krupski received the 2023 Blueprint Europe Whistleblowing Prize for his work. The Tesla Files, a book by Sönke Iwersen and Michael Verfürden based on the material uncovered by Krupski, was published on 24 July 2025 by Penguin Michael Joseph.
In August 2023, Tesla's Chief Financial Officer Zach Kirkhorn resigned unexpectedly. Dan Ives, a tech analyst at Wedbush Securities, speculated about various scenarios in which Kirkhorn might have left amicably, but also speculated about one possible scenario where Kirkhorn may have left due to a disagreement with Musk over "some aspect of strategy or succession".
Autopilot and Full Self-Driving fraud , Tesla is facing a criminal probe from the US Department of Justice over claims it has made about its "Full Self-Driving" driver-assist system or capability. Critics call out the company for selling and promoting its so-called Full Self-Driving (FSD) beta add-on when the software requires drivers' constant supervision and is not actually capable of full self-driving. Tesla's Full Self-Driving beta is generally considered a SAE Level 2 advanced driver-assistance system, similar to competitors' offerings such as General Motors' Super Cruise and Ford's Co-Pilot360. Legal scholars William Widen and Philip Koopman argue that Tesla has misrepresented FSD beta as SAE level 2 in order to "avoid regulatory oversight and permitting processes required of more highly automated vehicles." They argue that FSD beta should actually be considered a SAE level 4 technology, and have urged state Departments of Transportation in the U.S. to classify it as such, because publicly available videos show that "beta test drivers operate their vehicles as if to validate SAE Level 4 (high driving automation) features, often revealing dramatically risky situations created by use of the vehicles in this manner."
Tesla has benefited from increased sales and profit margins due to sales of the FSD option in particular, priced at $15,000 . In April 2019, when Tesla was low on capital, Musk announced that Tesla would have one million robotaxis on the road by the end of 2020; a few weeks later Tesla sold stock to raise an additional $3 billion, solving its cash troubles.
Elon Musk has repeatedly claimed that Tesla vehicles will be capable of full autonomy in the near future, but a Freedom of Information Act request made by PlainSite revealed that Tesla told the California Department of Motor Vehicles (DMV) in December 2020 they "do not expect significant enhancements" to the Full Self-Driving software that would enable full self-driving. In May 2021, the California DMV said it was investigating whether Tesla violated state regulations by misleading customers in its claims about "full self-driving". Bryant Walker Smith, an autonomous vehicle law expert at the University of South Carolina, said "it's so obviously clear that there's a contradiction" between what Tesla is saying in its marketing of Full Self-Driving versus what its lawyers and engineers have told the DMV. Smith said that using the name Full Self-Driving "leaves the domain of the misleading and irresponsible to something that could be called fraudulent". In August 2022, records surfaced showing that the California DMV had formally accused Tesla of false advertising Autopilot and FSD in July.
In Germany in July 2020, authorities ruled that Tesla misled consumers regarding the "abilities of its automated driving systems" and banned it from using certain marketing language implying autonomous driving capabilities. Upon appeal, that decision was reversed in 2021 by a higher court under the condition that Tesla clarify the capabilities of Autopilot on its website.
In a 2021 lawsuit against Tesla, Texas police officers claimed "systematic fraud" involving Tesla Autopilot after a Model X crashed into two parked police cars. , a trial has been requested. Further developments in that case are not clear and have not been reported on. In September 2022, Tesla was sued by drivers in a proposed class action suit over alleged false advertising of Autopilot and FSD.
Insiders revealed to the press in 2022 that the U.S. Department of Justice launched an investigation in 2022 following reports of more than a dozen crashes that involved Autopilot. Then, in a 2023 quarterly company report, Tesla stated receiving subpoenas from the Department in connection with the investigation and other probes.
Reselling defective vehicles In mid 2020, Tesla was accused of reselling defective "lemon" cars in the U.S. and Europe, followed by accounts of Norway Tesla service centers using lemons as loaners. Multiple customers have accused Tesla of knowingly selling defective vehicles in China as well. In September 2021, a Chinese court ruled that Tesla had acted in a fraudulent manner by reselling a customer a defective used Model S car.
Musk's promises