Musk said the following: The overwhelming focus is on solving full self-driving. That's essential. It's really the difference between Tesla being worth a lot of money or worth basically zero.
The connection you note between the company's profitability and its promises regarding the efficacy and delivery date of FSDC is fascinating for a number of reasons.
In the above lawsuit, the complaint alleges that according to the
Wall Street Journal, et al., Tesla was seriously undercapitalized in 2019 right about the time Musk made his public representations about FSDC, robotaxies, etc., in pod and webcasts before groups of investors and shareholders.
Soon thereafter, allegedly, the stock price and market share skyrocket, the company is suddenly flush with cash, and Musk begins hitting the targets required in his 2018 compensation package in order to receive his stock, he and the other Bd. of Directors members are vastly enriched.
So, at least three interesting questions are begged:
1) If Musk himself
relatively recently equated the success of FSDC with Tesla being 'worth a lot of money or worth basically zero,' then
precisely when was there a divergence between what Tesla's engineers were telling the company's CEO about FSDC's
actual efficacy and likely delivery date, and what he was (and is) telling investors and the public?
2) What is the significance of any difference that may have existed between
the truth known to the company (and quietly admitted to the CA DMV) about the
actual efficacy and delivery date of FSDC, and the public's
belief in the efficacy and imminent delivery of the software
based on what its CEO was saying?
3) In this 1999
UC Hastings law review article, the author notes that the majority of American jurisdictions do not allow punitive damages for breach of contract unless the conduct comprises an independent tort--like fraud, which is pled in the alternative to breach of contract in the above lawsuit, and which Tesla's lawyers struggle mightily to throw out in their motion to dismiss.
However, the author of the article argues that the theory of economic efficiency supports allowing punitive damages for
any willful breach of contract. And every first year law student knows that a party may ask for the establishment of new law or the extension of existing law under the court's rules. That's how we got the right to counsel in criminal cases, Native American tribes got the right to govern themselves, and a bunch of other stuff we now take for granted.
So: per this article, conceivably the evidence obtained through discovery in the above lawsuit (or some other copy cat case) could demonstrate that the company did willfully breach the sales agreements it made with more than a million people who ordered FSDC around the world--
either by making what it knew were false or reckless promises to induce people to pay for FSDC
or by refusing to refund the FSDC payments upon demand (or both).
And then there's the broader implication for Tesla and for people unsure of how to get a refund: If a bazillion plaintiff's lawyers currently make a perfectly good living by pursuing a high volume of low-dollar, rear-end collision claims, the vast majority of which are settled, then the lure (and threat) of getting punitive damages is analogous to pain-and-suffering damages that essentially fund the lawyer's contingent fee, while allowing for 100% return on the client's physical damages and medical treatment costs--which in our case are analogous to a 100% refund of the FSDC payments to clients.
Even if the courts did not buy the law professor's argument, the article provides a good faith basis for requesting them under the courts' rules--and it costs Tesla $650 to $1,000 an hour in each such case to respond, either in court or in arbitration.
Risk managers and adjusters often prefer to take the path of least resistance, which in this example is to refund the money, plus a little toward the 'nuisance value' of punitive damages claims (to satisfy the plaintiff's lawyer), which is far cheaper than shelling out $20,000 defense firm retainers that you never get back, win or lose. After all, we know from the docket in the above case that Tesla apparently is interested in settling such claims despite Musk's bluster.
In short: Tesla may have been banking (literally) for years that plaintiff's lawyers won't figure this math out and be incentivized to begin representing clients demanding refunds in court or in a simple, half-day arbitration (which Tesla pays for).
However, Musk's above, more recent statements about the connection between the success of FSDC and the company's profitability would seem to gesture at a whole new book of business for plaintiff's lawyers to add onto their existing personal injury practices.
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