How Concerned Should Tesla Investors Be About Its Multibillion-Dollar Legal Exposure?

Tesla faces mounting litigation exposure ranging from $2.7 billion to $14.5 billion across more than 20 active lawsuits, including racism discrimination cases and false advertising claims about full self-driving. While Tesla's $40 billion liquidity cushion provides protection against bankruptcy, the legal costs could significantly drag on earnings over time. The company recently settled with three of five named plaintiffs in a decade-long racism lawsuit involving nearly 600 workers.