Matthew Field
Mon, 23 October 2023
Tesla is under investigation by US authorities following claims the electric carmaker has been misleading customers over the driving range of its vehicles.
The Department of Justice (DOJ) has sent subpoenas to Tesla ordering it to share “certain matters” related to the vehicle range of its cars, Elon Musk’s car company said on Monday.
In a stock market disclosure, Tesla said US authorities were demanding information from the company on personal benefits and personnel decisions, as well as about the range of its electric cars.
It warned that the investigation risked having a “material adverse impact” on the company if US government officials decide to pursue enforcement action.
In July, Reuters reported Tesla cars had been displaying favourable battery estimates on its car dashboards that did not reflect real-life performance in a practice that started a decade ago. The report also alleged Tesla had created a “diversion team” to cancel appointments from drivers complaining about the range of their cars.
In August, the company was sued by drivers who claimed their cars were reaching only half their advertised range. One driver, James Porter, alleged his vehicle lost approximately 182 miles of range, despite only driving 92 miles.
The legal claim added: “Many Tesla owners noticed that the average range in their vehicles was well below the range Tesla had advertised prior to their purchase.
“Consumers who complained or scheduled appointments with Tesla regarding the below-advertised ranges in their vehicles discovered that Tesla would cancel such appointments and would explain that their electric vehicle was performing as intended.”
In a court filing earlier this month, Tesla said it intended to seek to have the claims dismissed.
Tesla has also been fined by officials in South Korea after a study found its cars were delivering just half their claimed range in cold weather conditions.
Like petrol cars, electric vehicles can lose mileage more quickly in colder conditions. They can also lose power when running their air conditioning or heating.
It comes as a further blow to Mr Musk, with US officials already scrutinising Tesla’s claims about its self-driving car technology. The US highways agency is also examining dozens of crashes involving Tesla’s Autopilot driver assistance tools.
In February, the US National Highway Traffic Safety Administration ordered Tesla to issue a software update to 363,000 vehicles running Tesla’s “full self-driving” system over concerns they may be ignoring stop signs and speed limits. Tesla said it disagreed with the findings but had made the update “out of an abundance of caution”.
US officials have also reportedly been probing the use of Tesla funds to build a glass house for Mr Musk in Texas and whether this had been properly disclosed to investors.
Of the latest investigations, Tesla said: “To our knowledge no government agency in any ongoing investigation has concluded that any wrongdoing occurred.”
Shares in Tesla fell 3.4pc in early trading in the US, although later recovered to trade flat at $212 (£173). The company’s shares are up 97pc so far this year despite concerns over waning demand for new EVs.
Electric car companies are facing increased scrutiny over their claims about range and recharging in advertising and marketing materials.
The UK’s Advertising Standards Authority banned two adverts from Hyundai and Toyota over exaggerated claims about recharging their electric cars. Both companies argued their adverts were not misleading.
Last week, Tesla reported revenues of $23.3bn, slightly below Wall Street expectations. Its profits came in at $1.85bn for the three months ending in September, lower than the previous quarter and down 44pc on the same period a year earlier.
The company has been trimming the prices of its electric vehicles to keep boosting sales amid stiff competition from new rivals, such as China’s BYD. Next month, Mr Musk plans to launch deliveries of a long-delayed pick-up, the Tesla Cybertruck.
Tesla says Justice Department is expanding investigations and issuing subpoenas for information
Mon, October 23, 2023
DETROIT (AP) — Federal prosecutors have expanded investigations into Tesla beyond the electric vehicle maker's partially automated driving systems, and they have issued subpoenas for information instead of simply requesting it, the company disclosed Monday.
In a quarterly report filed with the Securities and Exchange Commission, Tesla said the Department of Justice is looking into “personal benefits, related parties, vehicle range and personnel decisions,” without giving details.
The additional investigation topics and the subpoenas suggest that prosecutors have broadened their inquiry, and they have found the need to force Tesla to disclose information, legal experts say. The filing indicates prosecutors may be investigating Tesla CEO Elon Musk, and whether the company has been candid in describing the features of its vehicles, they say.
In January, Tesla disclosed that the Justice Department had requested documents related to its Autopilot and “Full Self-Driving” features. Both features are classified as driver-assist systems, and the company says on its website that the vehicles cannot drive themselves.
Now, the company is disclosing a probe that is “a lot wider than just looking at Autopilot and FSD features,” said Erik Gordon, a University of Michigan business and law professor. “The DOJ often starts with a formal written request and escalates to administrative subpoenas if it thinks it isn't getting full cooperation,” he said.
Specifying additional items that prosecutors are looking at indicates that Tesla lawyers found them serious enough to change the company's public disclosures, Gordon said.
Tesla didn't respond to a request for comment, but the company based in Austin, Texas, said in its SEC filing that to its knowledge, no government agency has concluded that any wrongdoing happened in any ongoing investigation. The Justice Department declined to comment.
For the first time, Tesla said in its filing that the investigations could damage the company's brand. “Should the government decide to pursue an enforcement action, there exists the possibility of a material adverse impact on our business, results of operation, prospects, cash flows, financial position or brand,” the filing said.
Jacob Frenkel, a former SEC enforcement attorney and ex-federal prosecutor, said specifically pointing out “personal benefits and related parties” suggests a possible connection to Musk. Disclosing that vehicle range is under scrutiny “also reflects a concern about the company's representations about vehicle features,” said Frenkel, now a partner with Dickinson Wright in Washington.
It's unclear if Tesla merely considered subpoenas as requests for information in prior quarterly disclosures, Frenkel said. “Now the broader inquiry including relating to the Autopilot and FSD features appears subject to subpoena,” he said.
It is not possible to tell from the filing how far along the Justice Department is in its probe or whether it will result in any criminal charges, Frenkel said.
“Adding the notion of a material adverse impact on the company's brand does suggest a heightened concern as to the potential consequences that could flow from a federal civil or criminal action,” Frenkel said. “It is reasonable to interpret these disclosures as suggesting an expanded continuing and even potentially more damaging investigation.”
Tesla's “Full Self-Driving” hardware went on sale late in 2015, and Musk has used the name ever since as the company gathered data to teach its computers how to drive. The company recently cut the “Full Self-Driving” price $3,000 to $12,000.
In 2019, Musk promised a fleet of autonomous robotaxis by 2020, and he said in early 2022 that the cars would be autonomous that year. In April, Musk said the system should be ready in 2023.
Since 2021, Tesla has been beta-testing “Full Self-Driving” using volunteer owners. On Tesla's third-quarter earnings conference call last week, Musk didn't directly answer a question about the timeline for Tesla vehicles to drive themselves and be deployed as robotaxis. “I guess I am very excited about our progress with autonomy,” he said, adding that the system can drive him around Austin with no interventions.
But Tesla's partially automated driving systems have been under investigation by the U.S. National Highway Traffic Safety Administration since June of 2016 when a driver using Autopilot was killed after his Tesla went under a tractor-trailer crossing its path in Florida. A separate probe into Teslas that were using Autopilot when they crashed into emergency vehicles started in August 2021. At least 14 Teslas that have crashed into emergency vehicles while using the Autopilot system.
Including the Florida crash, NHTSA has sent investigators to 35 Tesla crashes in which automated systems are suspected of being used. At least 17 people have died. The agency also is investigating complaints that Teslas can brake suddenly for no reason.
Auto safety advocates and government investigators have long criticized Tesla’s driver monitoring system as inadequate. Three years ago the National Transportation Safety Board listed poor monitoring as a contributing factor in a 2018 fatal Tesla crash in California. The board recommended a better system, but said Tesla has not responded.
Tom Krisher, The Associated Press
Mon, October 23, 2023
DETROIT (AP) — Federal prosecutors have expanded investigations into Tesla beyond the electric vehicle maker's partially automated driving systems, and they have issued subpoenas for information instead of simply requesting it, the company disclosed Monday.
In a quarterly report filed with the Securities and Exchange Commission, Tesla said the Department of Justice is looking into “personal benefits, related parties, vehicle range and personnel decisions,” without giving details.
The additional investigation topics and the subpoenas suggest that prosecutors have broadened their inquiry, and they have found the need to force Tesla to disclose information, legal experts say. The filing indicates prosecutors may be investigating Tesla CEO Elon Musk, and whether the company has been candid in describing the features of its vehicles, they say.
In January, Tesla disclosed that the Justice Department had requested documents related to its Autopilot and “Full Self-Driving” features. Both features are classified as driver-assist systems, and the company says on its website that the vehicles cannot drive themselves.
Now, the company is disclosing a probe that is “a lot wider than just looking at Autopilot and FSD features,” said Erik Gordon, a University of Michigan business and law professor. “The DOJ often starts with a formal written request and escalates to administrative subpoenas if it thinks it isn't getting full cooperation,” he said.
Specifying additional items that prosecutors are looking at indicates that Tesla lawyers found them serious enough to change the company's public disclosures, Gordon said.
Tesla didn't respond to a request for comment, but the company based in Austin, Texas, said in its SEC filing that to its knowledge, no government agency has concluded that any wrongdoing happened in any ongoing investigation. The Justice Department declined to comment.
For the first time, Tesla said in its filing that the investigations could damage the company's brand. “Should the government decide to pursue an enforcement action, there exists the possibility of a material adverse impact on our business, results of operation, prospects, cash flows, financial position or brand,” the filing said.
Jacob Frenkel, a former SEC enforcement attorney and ex-federal prosecutor, said specifically pointing out “personal benefits and related parties” suggests a possible connection to Musk. Disclosing that vehicle range is under scrutiny “also reflects a concern about the company's representations about vehicle features,” said Frenkel, now a partner with Dickinson Wright in Washington.
It's unclear if Tesla merely considered subpoenas as requests for information in prior quarterly disclosures, Frenkel said. “Now the broader inquiry including relating to the Autopilot and FSD features appears subject to subpoena,” he said.
It is not possible to tell from the filing how far along the Justice Department is in its probe or whether it will result in any criminal charges, Frenkel said.
“Adding the notion of a material adverse impact on the company's brand does suggest a heightened concern as to the potential consequences that could flow from a federal civil or criminal action,” Frenkel said. “It is reasonable to interpret these disclosures as suggesting an expanded continuing and even potentially more damaging investigation.”
Tesla's “Full Self-Driving” hardware went on sale late in 2015, and Musk has used the name ever since as the company gathered data to teach its computers how to drive. The company recently cut the “Full Self-Driving” price $3,000 to $12,000.
In 2019, Musk promised a fleet of autonomous robotaxis by 2020, and he said in early 2022 that the cars would be autonomous that year. In April, Musk said the system should be ready in 2023.
Since 2021, Tesla has been beta-testing “Full Self-Driving” using volunteer owners. On Tesla's third-quarter earnings conference call last week, Musk didn't directly answer a question about the timeline for Tesla vehicles to drive themselves and be deployed as robotaxis. “I guess I am very excited about our progress with autonomy,” he said, adding that the system can drive him around Austin with no interventions.
But Tesla's partially automated driving systems have been under investigation by the U.S. National Highway Traffic Safety Administration since June of 2016 when a driver using Autopilot was killed after his Tesla went under a tractor-trailer crossing its path in Florida. A separate probe into Teslas that were using Autopilot when they crashed into emergency vehicles started in August 2021. At least 14 Teslas that have crashed into emergency vehicles while using the Autopilot system.
Including the Florida crash, NHTSA has sent investigators to 35 Tesla crashes in which automated systems are suspected of being used. At least 17 people have died. The agency also is investigating complaints that Teslas can brake suddenly for no reason.
Auto safety advocates and government investigators have long criticized Tesla’s driver monitoring system as inadequate. Three years ago the National Transportation Safety Board listed poor monitoring as a contributing factor in a 2018 fatal Tesla crash in California. The board recommended a better system, but said Tesla has not responded.
Tom Krisher, The Associated Press
Elon Musk acted like a 'little baby' and was 'almost in tears' on Tesla's 'terrible' earnings call, analyst says
Lakshmi Varanasi
Sun, October 22, 2023
Elon Musk is CEO of Tesla. Its shares fell 15% in the past week.Getty Images
Financial analyst Kevin Paffrath criticized Elon Musk's comments on Tesla's recent earnings call.
He said Musk blamed the EV maker's struggles on economic factors instead of "coming up with a plan."
Tesla's third-quarter results fell short of analysts' expectations.
It's now clear that Tesla's third-quarter earnings call on Wednesday didn't exactly go as expected.
CEO Elon Musk acted like "a little baby," financial analyst and YouTuber Kevin Paffrath recently told Yahoo Finance. He also described the call as "terrible" and said Musk was "almost in tears" at one point.
"For a leader to cry about the economy rather than funneling that and coming up with a plan is pathetic," said Paffrath, who has almost 1.9 million subscribers on his Meet Kevin YouTube channel, and owns Tesla stock.
Paffrath pointed to Musk's comments on Tesla's gigafactory in Mexico as an example. The $10 billion endeavor, which Musk confirmed during a meeting with investors in March, would be the company's sixth and most expensive factory to date.
Musk suggested at one point on the call that he was delaying the factory in light of rising interest rates, which make borrowing more expensive. "If interest rates remain high or if they go even higher, it's that much harder for people to buy the car. They simply can't afford it," Musk said, pointing to the impact on monthly car loan payments.
But Paffrath slammed Musk's response, saying the Tesla CEO was "afraid," and suggested that Musk should negotiate a better deal with the Mexican government or potentially "advertise to higher-income areas." Paffrath has previously called on Tesla to promote its products to non-fans.
"We need to know the light is at the end of the tunnel rather than hearing a complaining CEO who's not actually providing that path," he told Yahoo Finance.
Kevin Paffrath hit out at Elon Musk's comments on the Tesla earnings call.Meet Kevin/YouTube
Tesla reported weaker than expected third quarter results, with both earnings per share and revenue of $23.35 billion falling short of analysts' estimates.
Shares in the EV maker fell 15% in the past week, valuing the company at $664 billion, but the stock is still up 96% this year.
Paffrath is far from the only analyst who's criticized Musk's performance on the call. Wedbush Securities analyst Dan Ives characterized it as a "mini disaster" in which a "cautious Musk'' focused on high interest rates and tempered expectations around the Cybertruck.
Tesla did not immediately respond to a request for comment from Insider, made outside normal working hours.
Lakshmi Varanasi
Sun, October 22, 2023
Elon Musk is CEO of Tesla. Its shares fell 15% in the past week.Getty Images
Financial analyst Kevin Paffrath criticized Elon Musk's comments on Tesla's recent earnings call.
He said Musk blamed the EV maker's struggles on economic factors instead of "coming up with a plan."
Tesla's third-quarter results fell short of analysts' expectations.
It's now clear that Tesla's third-quarter earnings call on Wednesday didn't exactly go as expected.
CEO Elon Musk acted like "a little baby," financial analyst and YouTuber Kevin Paffrath recently told Yahoo Finance. He also described the call as "terrible" and said Musk was "almost in tears" at one point.
"For a leader to cry about the economy rather than funneling that and coming up with a plan is pathetic," said Paffrath, who has almost 1.9 million subscribers on his Meet Kevin YouTube channel, and owns Tesla stock.
Paffrath pointed to Musk's comments on Tesla's gigafactory in Mexico as an example. The $10 billion endeavor, which Musk confirmed during a meeting with investors in March, would be the company's sixth and most expensive factory to date.
Musk suggested at one point on the call that he was delaying the factory in light of rising interest rates, which make borrowing more expensive. "If interest rates remain high or if they go even higher, it's that much harder for people to buy the car. They simply can't afford it," Musk said, pointing to the impact on monthly car loan payments.
But Paffrath slammed Musk's response, saying the Tesla CEO was "afraid," and suggested that Musk should negotiate a better deal with the Mexican government or potentially "advertise to higher-income areas." Paffrath has previously called on Tesla to promote its products to non-fans.
"We need to know the light is at the end of the tunnel rather than hearing a complaining CEO who's not actually providing that path," he told Yahoo Finance.
Kevin Paffrath hit out at Elon Musk's comments on the Tesla earnings call.Meet Kevin/YouTube
Tesla reported weaker than expected third quarter results, with both earnings per share and revenue of $23.35 billion falling short of analysts' estimates.
Shares in the EV maker fell 15% in the past week, valuing the company at $664 billion, but the stock is still up 96% this year.
Paffrath is far from the only analyst who's criticized Musk's performance on the call. Wedbush Securities analyst Dan Ives characterized it as a "mini disaster" in which a "cautious Musk'' focused on high interest rates and tempered expectations around the Cybertruck.
Tesla did not immediately respond to a request for comment from Insider, made outside normal working hours.
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