Tesla Says Justice Department, SEC Are Investigating Model 3 Production Targets (cnbc.com)

Tesla said in a regulatory filing Friday that the SEC and Justice Department are investigating their Model 3 production projections to see if they misled investors. CNBC reports: The filing confirms much of an Oct. 26 article in The Wall Street Journal that said FBI agents were looking at whether Tesla misled investors about production of its Model 3 sedans. The FBI is the principal investigative arm of the Justice Department. The SEC, which just settled its securities fraud investigation against CEO Elon Musk and the company, has separately subpoenaed Tesla for Musk's statements about production rates regarding its popular Model 3 sedan, the company said. DOJ prosecutors have also asked for the same information, although it stopped short of issuing a formal subpoena, the company said in a filing with the SEC. In an interview with Recode's Kara Swisher, Elon Musk denied the validity of the WSJ article.

"The amount of untruthful stuff that is written is unbelievable. Take that Wall Street Journal front-page article about, like, 'The FBI is closing in.' That is utterly false. That's absurd," Musk told Swisher. "To print such a falsehood on the front page of a major newspaper is outrageous. Like, why are they even journalists? They're terrible. Terrible people."

Comments

Journalists are getting themselves extinct

[DontBeAMoran]

Bloomberg and their stupid "china spyware chips are everywhere" bullshit story, WSJ trying to make Tesla fail... it's like the media is being controlled by idiots who believe technology is evil.

Next up, newspapers publishing that coal is clean, nuclear is a gift from satan himself and space travel is impossible because the earth is all that exists in the universe.

Re:Journalists are getting themselves extinct

[rtb61]

What is interesting about the Tesla beat up, focus on the cars, ignore the solar panels, batteries and controllers, they do not exist, shh (where the majority of money will come from in Tesla future, not high end cars which was always a limited market but home power systems where it has a big yet to be exploited edge). It seems the real target is those home energy systems, getting them off the market before more damage is done to the fossil fuellers. Lobbyists are continuing to fund government corporate appointees controlling government agencies on behalf of hedge fund managers buried up to the eyeballs in fossil fuels.

Home power system, distributed energy networks, where the power stations have already been built, your home and only need the generators, solar panels and batteries, system that generate a surplus and feed, medium and high density residential as well as commercial, you even maintain the system for them and they pay you for your excess electricity. Check the return on solar power, compared to what you nobodies can generate in bank interest on your capital. When you don't pay for electricity, you get to keep that income, you panels generate a far better return than bank interest payments and they self adjust to inflation and you pay ZERO TAX on the return, woo hoo. You can see why Tesla must die.

Re:Journalists are getting themselves extinct

[Rei]

Yeah, they've been seriously cell deprived. It's not enough that between 18650s and 2170s the Tesla-Panasonic alliance is now making 60% of the world's total EV battery capacity - Tesla has also been having to buy cells from other manufacturers to keep their Powerwall and Powerpack production going. Tesla's been consuming cells like a beast, mainly for Model 3, and it's impacting their other product lines.

Panasonic has been lagging, but they're trying to catch up. At the end of Q3, GF1 was producing 2170s at an annualized rate of around 20GWh/year (current global production for EVs is around 40GWh/year). Panasonic is installing three of its new, faster line design (joining the 10 lines of their older design); this is expected to bring them up to 35GWh/year by March.

Gotta love those sorts of scaling factors. We live in interesting times.

BTW, Panasonic has stated that they're not going to be building out lines in Shanghai next year, although might in the long-term. Their capital is currently focused on GF1. Model 3 production at GF3 will be started using a mix of cells, both imported from GF1 and from local Chinese manufacturers. From the 10-Q, it looks like they're planning to take the route I laid out on TMC a couple weeks ago:

  * Fremont's lines are all designed for 10k/wk production rates, but some - namely, paint and GA (general assembly), look likely to bottleneck out at 7k/wk. Upping these rates would require meaningful investment and/or downtime to boost to 10k - but Tesla doesn't really need 10k/year in the US. The body, stamping and plastics lines all look ready for 10k.
  * Tesla has already started site work at Shanghai. Their first step will be to have it leveled and prepped, with utility and transport connections in place. A factory is worthless if things and people can't move smoothly in and out.
  * GA lines are the fastest and easiest to build; Tesla made one in a month out of scrap in Q2 this year. I expect them to have the first GA line up in late Q2 of next year.
  * Paint lines are more complicated to get running smoothly and consistently. I expect them to open their first paint line in Q3/Q4 of next year.
  * At this stage, they'll import BIWs (Body In Whites), made using the extra 3k capacity in the body, stamping and plastics lines at Fremont, and finished packs and drive units from GF1. So Fremont will be at 7k and GF3 at 3k. BIWs will need either dry packaging or temporary anti-corrosion coatings for shipping, so Tesla will have to prep for this.
  * Stamping, plastics, body, pack, and cell production will come on line in early '20, along with new GA and paint lines to ramp local production (specifically, to add Model Y production into the mix). This also frees up 3k capacity at Fremont and GF1.
  * In the meantime, GF4 prep work, the first GA line, and the first paint shop will have been completed in Germany (early '20, 2-3 quarters behind Shanghai). So the extra BIWs, drive units and packs get shipped to GF4, and the Shanghai process repeats.
 

AIUI it's about production figures not forecasts

[gman003]

As I understand it, the problem under investigation is not "Tesla forecast they'd make X many but only made Y". Failure to predict the future is not illegal, and even being overly optimistic in your shareholder forecasts isn't a crime. As long as they weren't egregiously bullshitting when they made that public, they'd be good.

The area under investigation is the actual production numbers. Tesla shorts have latched onto a pretty bonkers theory that Tesla was somehow falsifying their production numbers - fake VINs, or delivering known-defective vehicles to count them as "delivered" even though they'd need to be replaced. Some of it is quibbling over the definition of "delivered" - is something sent to a dealer counted as a "delivery" or does that only count when someone buys it? - made worse by Tesla not using independent-ish dealerships, but rather their own stores.

I personally don't think there's a case here. Musk makes schedules he can't keep, and promises features he can't deliver, but he really doesn't lie about accomplishments. Especially not ones that are so easily verified - the FBI will have a pretty easy time finding out if VINs are being misallocated, so the investigation should be pretty short.

Market does not think it is anything big.

[140Mandak262Jamuna]

The Wall St report came last week and stopped a good momentum, but the stock recovered very soon. This disclosure came early today during trading hours, and the stock barely budged. Looks like whatever it is, it has been fully priced into the stock.