Tesla Is Facing a ‘Deepening Criminal Probe’ About Misleading Investors on Its Model 3 Production, Report Says
Tesla, the pioneering electric-car manufacturer that posted blowout earnings this week, may be facing an FBI investigation over investor communications it made regarding the production levels of its Model 3 sedans, the Wall Street Journal said Friday.
Earlier this month, Tesla settled with the SEC over charges that it misled investors after CEO Elon Musk tweeted that he had secured funding to take Tesla private. The SEC, which alleged that the tweets were fraudulent, at first sued Musk, before reaching a settlement that required Musk and Tesla to each pay $20 million in fines, while finding an independent chairman to replace Musk.
According to the Journal, Tesla the FBI “has intensified” its investigation into whether Tesla misstated data on the production of its Model 3, its lowest-priced sedan. Tesla has invested heavily in the Model 3 production, adding to losses in recent quarters. Last quarter, however, Model 3 sales pushed Tesla into the black.
In a statement, Tesla disputed some of the Journal’s report. “Earlier this year, Tesla received a voluntary request for documents from the Department of Justice about its public guidance for the Model 3 ramp,” a Tesla spokesperson said in a statement to Fortune. “We have not received a subpoena, a request for testimony, or any other formal process, and there have been no additional document requests about this from the Department of Justice for months.”
The Journal reported that former Tesla employees, who received subpoenas earlier in the investigation, have been contacted in recent weeks by the FBI for further testimony.
Musk told investors on earnings calls that Tesla would be producing between 5,000 and 20,000 Model 3s per month by the end of 2017, the Journal said. In reality, Tesla ended up producing only 2,700 Model 3’s for all of 2017. The FBI is reportedly investigating such discrepancies.
While Tesla admits it did not meet its early and ambitious production goals, it said it was “transparent about how difficult it would be… and that we were entering ‘production hell.’” Tesla further noted that “it took us six months longer than we expected to meet our 5,000 unit per week guidance,” but that its approach has been “to set truthful targets – not sandbagged targets that we would definitely exceed and not unrealistic targets that we could never meet.”
Tesla’s stock, which rose 5.2% Friday during official trading, was down 1.8% in after-hours trading.