Elon Musk's involvement in Donald Trump's administration has been polarizing, to say the least. Now it could also make Tesla the subject of a potential shareholder lawsuit brought by the New York City Law Department.
What's happening?
Teslarati has reported that New York City's comptroller, Brad Lander, is asking the municipality to sue Tesla based on Musk's activities within the Department of Government Efficiency.
In a release, Lander asserted that Musk's work with the administration has taken the CEO away from his duties with Tesla. The company's stock has plummeted since Musk joined DOGE, causing "losses over $300 million for the New York City pension systems," Lander said in the release.
"Material misstatements from Tesla misled investors about [Musk's] role at the company," he continued.
If the city were to sue Tesla and win, Teslarati added, any money awarded could be used to cover the pension system losses. Litigation might also put pressure on "governance changes" at the company.
Why is this important?
The potential lawsuit is just the latest challenge in what's been a tough year for the electric vehicle maker.
In the first three months of 2025, the company's stock lost more than a third of its value. At the same time, Tesla sales have fallen drastically, hitting a "peak" in August 2023 that Kelley Blue Book analysts question it will ever reach again. Data also shows that more Teslas are being traded in than ever before.
As Teslarati noted, it's not a brand-new concern among Tesla shareholders that Musk's time spent on DOGE could be hurting his company and their investments. Of course, there have been impacts on Tesla customers too.
A number of Tesla dealerships have been the subject of protests and vandalism in apparent response to Musk's governmental role. Consumers hoping to explore and purchase EVs might feel hesitant to do so in the midst of these actions.
There is also the potential for a lawsuit like the one Lander has suggested to negatively impact Tesla customers should a financial drain on the company be felt on the consumer end.
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Definitely 👍 But amid concerns that the situation could have downstream impacts on the environment by disrupting new EV adoption, there are still plenty of routes for consumers to take should they wish to switch to electric or upgrade from their current model.
What can EV enthusiasts do?
While Musk faces the possibility of lawsuits and further criticism, it may be worth keeping in mind that Tesla isn't the equivalent of its CEO alone. The technology at the heart of the company was developed by many people, and the enterprise continues to be operated by many more.
If factors like this new potential lawsuit give consumers cause for pause, they might consider purchasing any number of other EVs. Once a much more limited market, Tesla has opened the door for larger automakers to proceed with their own models by proving there's real demand for electric vehicles.
In fact, EVs have never been more popular. Last year, a record 1.3 million EVs were sold in the United States.
Whether it's a Tesla or any other brand, buying an EV is still one of the most impactful steps an individual can take in lowering their carbon footprint. The Environmental Defense Fund has estimated that a massive transition from gas-powered vehicles to EVs could result in 800 million fewer tons of carbon pollution "every year by 2040" — or more than Canada's annual output.
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