Tesla Faces Criminal Probe Over Model 3 Production Claims

Tesla hasn’t had an easy 2018, thanks to a combination of ramp-up difficulties surrounding the Model 3 and the erratic behavior of its CEO, Elon Musk. The latter, at least, appears to have straightened out some of his own problems after repeatedly attacking a private citizen with claims he was a pedophile, being fined for making untrue statements regarding Tesla potentially going private, blowing up at investors on conference calls, and misrepresenting the circumstances of a fatal accident involving one of his company’s vehicles. This week, Tesla reported a rare profitable third quarter and showed evidence that its Model 3 ramp, while not quite yet reliably at 5K cars per week, has improved dramatically from where the company was this time last year.

Unfortunately, Elon Musk’s legal problems may be about to get a whole lot worse. The Wall Street Journal reports that the DOJ is now looking into whether Tesla misled investors about its vehicle production ramp for the Model 3 back in 2017. As some of you may remember, the company’s production schedule looked like this:

The company’s actual production, as estimated by Bloomberg earlier this year, was more like this:

You may notice that the two graphs are rather different. Instead of hitting ~2500 cars per week in November (that’s our eyeballed rate for that production point), the company hadn’t even broken 1,000 vehicles per month. The WSJ notes that Tesla had stated in September that it responded voluntarily to requests from the DOJ for documents, but did not disclose that the documents might be related to its Model 3 ramp as opposed to Elon Musk’s statements on Twitter that eventually led to a civil settlement with the SEC. Former Tesla employees have reportedly been contacted by the FBI.

I’m going to be honest and say that it’s not clear to me precisely where the legal line is between a company simply being wrong about its own ramp and a company that is found to have made materially false statements about its production timeline. It’s not unusual for companies to face investor lawsuits if they make promises about products that don’t come true, whether the statements refer to a predicted launch timeline or the overall performance of the hardware itself. Intel was sued earlier this year for not disclosing Spectre and Meltdown sooner. AMD paid to end a lawsuit filed against it over the Llano launch. But in both cases, these were investor lawsuits, not criminal investigations, and the DOJ clearly believes there’s reason to suspect Tesla’s plans for an aggressive 2017 ramp (it unveiled its own projected timeline in February 2017) crossed the line from “Elon setting aggressive goals” to “Tesla covering up evidence that should have been disclosed.” Musk, for example, tweeted the following on July 2, 2017:

Looks like we can reach 20,000 Model 3 cars per month in Dec

— Elon Musk (@elonmusk) July 3, 2017

Musk actually produced 2,700 Model 3 vehicles in that same time period. The purpose of the DOJ investigation appears to be to discover if the company knew that its own projections were impossible. While Tesla made a strong return to profitability in the most recent quarter, it hasn’t unveiled the $35,000 Model 3 vehicle it promised, it’s removed its “full self-driving” upgrade offer from its website, and the delays to Model 3 production mean that some customers who may have reserved the vehicle counting on a $7,500 tax credit to make it affordable will never see the benefit — the tax credit has begun phasing out for Tesla buyers due to volume of vehicles sold.

The New York Times states that Tesla has released a statement on the WSJ story claiming that it has only received a voluntary request for documents. “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 Tesla spokesperson said.

Continue reading

Protect Your Online Privacy With the 5 Best VPNs

Investing in a VPN is a smart choice right now, but the options are vast. To help narrow things down a bit, we've rounded up five of our very favorite consumer services.

NASA Probe Stows Huge Asteroid Sample for Return to Earth

Following the recent successful touch and go operation, NASA has reported a sizeable sample of the asteroid has now been locked away in the probe's sample return container.

Voyager 2 Probe Talks to Upgraded NASA Network After 8 Months of Silence

NASA just said "hello" to Voyager 2, and the probe said it back.

Scientists 3D Print Microscopic USS Voyager With Its Own Propulsion

It doesn't have warp engines, but it can get along fine with the help of hydrogen peroxide and platinum.