Sept 30 (Reuters) - Tesla and its CEO Elon Musk

on Monday won the dismissal of a lawsuit accusing them of

defrauding shareholders by overstating the effectiveness and

safety of the automaker's self-driving technology in order to

boost its stock price.

U.S. District Judge Araceli Martinez-Olguin in San Francisco

said shareholders failed to show Tesla and Musk should be liable

for falsely promising they were close to delivering technology

that would drive safer than humans, but that was actually

"plagued with safety issues" and encouraged inattentiveness.

Tesla vehicles have included "Autopilot" software designed

to enhance self-driving capabilities, and the company has sold

"Full Self Driving" software upgrades.

Martinez-Olguin said some of Tesla's and Musk's challenged

statements were not necessarily false, while others could be

excused because they addressed future expectations for the

technology.

She said Musk's "hands-on" management did not mean he knew

more than he let on, while his nearly $34 billion profit from

selling Tesla shares in the February 2019 to February 2023 class

period did not show he was cashing out at other shareholders'

expense.

Shareholders said Musk, the world's richest person, received

about $39.4 billion of proceeds from those stock sales,

approximately the same as Vermont's gross domestic product.

Lawyers for the shareholders did not immediately respond to

requests for comment. Tesla did not immediately respond to

similar requests. The judge dismissed the lawsuit without

prejudice, meaning that shareholders can amend it.

Tesla still faces probes by the U.S. Department of Justice

and U.S. Securities and Exchange Commission, as well as a case

by the California Department of Motor Vehicles, into its

self-driving claims.

The case is Lamontagne v Tesla Inc ( TSLA ) et al, U.S. District

Court, Northern District of California, No. 23-00869.