Breaking News
Investing Pro 0
Black Friday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

U.S. securities regulator subpoenas Tesla on Model 3 production estimates

Stock Markets Nov 05, 2018 11:27AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. A 2018 Tesla Model 3 electric vehicle is shown in Cardiff, California,
 
TSLA
-0.19%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

(This version of the story has been refiled to correct spelling of partner in paragraph 10 and 11)

By Alexandria Sage

SAN FRANCISCO (Reuters) - Tesla (NASDAQ:TSLA) Inc said on Friday it had received a subpoena from the U.S. Securities and Exchange Commission over forecasts it made about Model 3 production in 2017, a set of targets the electric vehicle company failed to hit on time.

The SEC issued subpoenas over "certain projections that we made for Model 3 production rates during 2017 and other public statements relating to Model 3 production," Tesla said in a quarterly filing on Friday. A subpoena can compel a company to turn over materials that the requesting agency wants to review.

The SEC had also issued subpoenas in connection with Chief Executive Elon Musk's previous statements that he was considering taking the company private, it said.

Both the SEC and U.S. Department of Justice are looking at whether Tesla misled investors about its business.

"To our knowledge no government agency in any ongoing investigation has concluded that any wrongdoing occurred," Tesla wrote in its filing.

The SEC declined to comment.

The company also said on Friday that 44 percent of its third-quarter net profit was from previously undisclosed regulatory credits.

Investors have been trying to ascertain if the worst is over for the Silicon Valley company amid the fallout from Musk's short-lived plan in August to take the company private, and determine if Tesla has finally stabilized its rocky Model 3 production and can build the car at a profit.

Following the launch of the Model 3 last year, Tesla repeatedly missed aggressive production targets for the new vehicle, blaming "manufacturing bottlenecks."

Jay Dubow, a partner with Pepper Hamilton LLP and former branch chief in the SEC's enforcement division, said the agency was likely looking at whether Tesla's projections had been "based on fact or not."

"It is possible for another SEC enforcement action down the road if it turns out that the projections were purposefully or recklessly made without a basis," Dubow said.

Tesla is already facing a proposed class action shareholder lawsuit claiming that the company and top executives made false statements about the readiness of the Model 3 for volume production. The lawsuit cites repeated promises in 2017 that Tesla was "on track" to build 5,000 Model 3s per week by the end of that year at its factory in Fremont, California.

Tesla finally met that target in June of this year.

Tesla has denied the claims, saying it disclosed production bottlenecks once identified, and pointing to Musk's public statements that the company was undergoing a period of "production hell" in 2017.

A Tesla spokesperson told Reuters last week that the company had received a voluntary request from the Department of Justice for documents related to Model 3 production forecasts, but had not received a subpoena.

ZERO EMISSION CREDITS

Tesla has weathered a rocky few months in the wake of Musk's tweets that he had "funding secured" for a deal, later scuttled, to take Tesla private. Musk and Tesla settled with the SEC in September after the agency sued for fraud.

The settlement required Tesla and Musk to pay a fine of $20 million each and for Musk to give up his chairman role for three years.

Last week, investors were cheered by the company's third-quarter net profit, wider margins and positive cash flow, which sent shares climbing.

The company said then it had booked $52 million in "zero emission vehicle" credit sales. It did not say at the time that it had gained another $137 million in regulatory credits, which contributed to nearly half of the profit.

Tesla also said in its quarterly filing that it planned to start building about 3,000 Model 3 vehicles per week in Shanghai in the initial phase of its Gigafactory 3, to reduce the impact of tariffs.

Model S and Model X sales in China will likely continue to be hurt by recently increased tariffs imposed by the Chinese government on U.S.-manufactured vehicles, it said.

Tesla shares closed up less than half a percent to $346.41 on Friday.

U.S. securities regulator subpoenas Tesla on Model 3 production estimates
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
enock kgomotso selowa
enock kgomotso selowa Nov 03, 2018 6:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Smoke
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email