New York City's pension fund officials are calling for a lawsuit against Tesla, alleging that CEO Elon Musk has failed in his leadership duties, leading to significant financial losses for shareholders.
The city's comptroller, Brad Lander, has requested the New York City Law Department to pursue legal action on behalf of the pension system, which owns approximately 3 million Tesla shares.
Lander argues that Musk has neglected his responsibilities at Tesla in favor of other ventures, including his involvement with DOGE and support for former President Donald Trump. "Ever since Musk shifted focus away from Tesla, the company has suffered enormous financial losses," Lander stated.
According to him, Tesla's stock has dropped nearly 40% in just three months, resulting in losses exceeding $300 million for the New York City pension system, Electrek said.
The comptroller also criticized Tesla's board for failing to provide independent oversight. He claimed that Musk has misled investors by continuing to assert his active role in Tesla's leadership, despite evidence suggesting otherwise.
Lander insists that the lawsuit is necessary to hold Musk accountable and recover shareholder losses.
NYC to sue Tesla over Elon Musk's alleged breach of fiduciary duties https://t.co/ME5RkFImvL by @fredericlambert
— Electrek.co (@ElectrekCo) April 2, 2025
Tesla Faces Investor Backlash Over Musk's Conflicting Interests
This is not the first time Musk's leadership has been called into question. Last summer, Tesla shareholders sued the company over an alleged breach of fiduciary duty, accusing Musk of diverting resources to his AI startup, xAI.
The lawsuit claimed Musk funneled Tesla employees and resources to xAI, while also using his influence to benefit his private companies at Tesla's expense.
The NYC comptroller's latest action builds on these concerns, arguing that Tesla knowingly misled investors regarding Musk's commitment to the company.
In Tesla's December 2024 SEC filing, the company stated, "We are highly dependent on the services of Elon Musk, Technoking of Tesla and our Chief Executive Officer." Despite these claims, Musk's recent actions suggest he is focused on political and personal interests rather than Tesla's success.
If the lawsuit moves forward, it could have significant implications for Tesla's corporate governance and financial stability.
Shareholders may seek policy changes to ensure Musk either commits fully to Tesla or steps aside for a more engaged CEO.
The legal battle could also force Tesla to be more transparent about its leadership structure and decision-making processes.
Tesla has not yet responded to the allegations or Lander's request for legal action.
According to NY Times, Musk has acknowledged that his actions outside Tesla have impacted the company, stating, "My Tesla stock and the stock of everyone who holds Tesla has gone, went roughly in half."
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