Tesla got the classic bad news/good news scenario today as JPMorgan Chase sued the EV maker for $162 million, claiming it breached a contract from 2014.
Meanwhile, the U.S. National Transportation Safety Board announced it was closing an investigation into a fatal crash in California involving a Tesla Model 3. The agency is not taking further action.
Investigators examined a fatal August 2020 crash into the back of a minivan in Saratoga, California. The Autopilot system was engaged; however, the driver was manually pressing the accelerator pedal causing the vehicle to go into override mode.
The Tesla then hit a truck at a high rate of speed and then caught fire resulting in fatal injuries to the Tesla driver and passenger. NTSB officials have been publicly critical of Autopilot and Tesla CEO Elon Musk, claiming the company hasn’t done enough to educate owners about the system’s limitations. Musk says the company is clear to delineate the system’s capabilities.
The National Traffic Highway Safety Administration is conducting an investigation into nearly a dozen crashes involving Tesla vehicles using Autopilot and struck emergency vehicles parked on the side of the road while responders were engaged. Overall, NHTSA has opened 30 investigations into Autopilot-related crashes.
Heading to court
Tesla’s apparently headed to court after JPMorgan Chase and Co. filed suit in federal court in Manhattan against the company for $162.2 million, Reuters reported.
The suit stems from a 2014 deal the two sides reached. The EV maker sold the bank warrants, which are essentially guarantees that allow the holder to purchase company stock at a set price and date. The deal also allows the bank to adjust the set price depending upon special circumstances.
“Special circumstances” developed when Musk tweeted about taking the company private at $420 a share in August 2018 — a plan he later rescinded and was subsequently fined $20 million by the Securities and Exchange Commission.
The bank adjusted the set price after the two events. In early 2019, Reuters reported, the EV maker complained about the adjustment, calling them “opportunistic.”
Tesla’s share price rose approximately 10-fold by the time the warrants expired in June and July. The bank says Tesla, per the terms of the contract, was required surrender stock or cash, adding Tesla’s failure to do that amounted to a default.
“Though JPMorgan’s adjustments were appropriate and contractually required,” the complaint said, “Tesla has flagrantly ignored its clear contractual obligation to pay JPMorgan in full,” the bank said.