By on October 27, 2018

Given that Tesla CEO Elon Musk’s Twitter account now has third-party oversight, it’s unlikely we’ll see angry missives about the Fun-Busting Interrogators this weekend. However, that won’t stop the FBI from probing Musk’s past production promises for the Model 3 sedan.

As part of an ongoing Department of Justice investigation that kicked off after Musk’s fateful August 7th “funding secured” tweet, the FBI wants to know if the automaker misled investors via production promises that didn’t pan out.

News of the expanded probe comes by way of a Wall Street Journal report, citing unnamed sources. Tesla initially said it planned to reach a 5,000-vehicles-per-week production target for its Model 3 sedan by the end of 2017. That didn’t happen, nor did the pushed-back target date of end-of-March, 2018. It was only in the week leading up to the end of June that the company pushed out enough vehicles to say it had reached its goal — though the average weekly rate, to this day, remains below that marker.

“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,” a Tesla spokesperson told the publication.

However, the WSJ reported that several Tesla employees have received subpoenas, as well as requests for information. The automaker has already submitted info to the DOJ related to Musk’s public pronouncements regarding production figures.

After landing in hot water with the feds over Musk’s failed go-private gambit (and the hasty tweet that preceded it), Tesla and its CEO were forced to settle with the Securities and Exchange Commission after the regulator slapped the company with a fraud lawsuit. Tesla and Musk were ordered to pay $20 million each, with Musk booted from the chairman’s seat for a period of three years.

At the time, Musk blamed the slow ramp-up of Model 3 production on a variety of factors, mainly supply issues. However, in order to achieve one-off weekly rates of 5,000 vehicles, the company’s Fremont, California assembly plant had to construct a new production line inside an outdoor, tent-like structure. The tent’s existence was only revealed in June.

[Image: Elon Musk/Twitter]

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13 Comments on “FBI Now Probing Lofty Tesla Production Promises...”


  • avatar
    Pch101

    I’m a Tesla skeptic, but this sounds like a stretch. Clearly, the company has been endeavoring to produce a Model 3 and has in fact done so. Production and R&D delays are not unusual in the auto industry.

    On the other hand, the FTC should be following in the footsteps of the Germans by pointing out that referring to its driver assist product as “Autopilot” is grossly misleading. (And it’s becoming obvious why Tesla is inclined to exaggeration, as Musk is betting heavily that selling its driverless technology to other OEMs is its ticket to prosperity.)

    And Tesla clearly misled prospective buyers of the Model 3, creating a reservations list for what was supposed to be a $35k car only to change its ordering system so that new reservation holders who are willing to pay a lot more than $35k can cut in line. That sounds like a bait-and-switch, a plan to get loans at zero percent interest from prospective buyers who may never be served.

    • 0 avatar
      Asdf

      Referring to a version of the Model 3 as having “Long range” is also grossly misleading, as the range of this version is average at best, compared with other cars with various engine types.

  • avatar
    Asdf

    At least there’s no need for an investigation to conclude that Elon Musk is incompetent and unable to build a competitive car. The extremely slow charging time of every single Tesla in existence is ample proof of that, along with the fact that Musk hasn’t even managed to fix this basic defect even after 15 years!

  • avatar
    Big Al from Oz

    I really don’t believe that Musk can be held responsible for the over reaching and over stating (bullsh!tting in layman’s terms) comments.

    If people buy his Koolaid, then they suffer the losses, those who research and decide not to buy into a Ponzi scheme they don’t lose out.

    SpaceEx is trying to find 1/2 a billion dollars at the moment as well.

    I think within 5 years Musk will be brought back down to earth and most likely living in a trailer park.

    He’s done amazing things and has some amazing ideas. But, they must be viable, if viable Musk needs to employ the correct people, not just yes men who want to appease him and his dreams.

    Reality will strike home sooner or later.

  • avatar

    Reality is that in 5 years Arian will be out of business and Tesla will be one of Big 3 (if Ford is still alive).

  • avatar
    Master Baiter

    As a Bay Area resident, I’m no Tesla hater, but ol’ Elon appears to be running a bit of a bait-and-switch operation. I played tennis this morning with a guy who ordered his Model 3 in early September and received it one week later. Meanwhile, others who ordered the mythical $35K version will be having to make arrangements to have the car delivered to their estates, as they will have passed before Elon gets around to actually building their car.

    The astute among us predicted this from day one. Tesla has no magic wand that enables them to turn a profit on vehicles that traditional manufacturers have concluded are nothing more than loss leading compliance cars.

    • 0 avatar
      mcs

      It might have been a bait and switch at the beginning, but at this point, any of the 35k car reservation holders can get their deposit back anytime they want. As far as ordering goes, you can’t place an order for a $35k car. It’s not on the configuration page. I just checked.

      Jaguar is (or was) doing the same thing with the iPace. I’m sure Porsche will do the same thing with the Taycan and there will be a hefty ADM that more than consumes the subsidy as well. Also, in the Taycon deposit agreement is “Prospective Buyer shall not acquire (i) any right to purchase a Porsche Taycan vehicle,” .. “as compared to customers who did not participate in the Taycan Deposit Program.” So they’re doing exactly the same damned thing. The deposit is dealer dependent and there have been reports that it ranges from $2500 to $5000. Supposedly there will be only 20k per year produced, but that will probably get bumped up. Maybe Tesla can teach them how to increase their production? I’m willing to bet a lot of Porsche deposit holders won’t see their cars for over a year.

      “Tesla has no magic wand that enables them to turn a profit on vehicles that traditional manufacturers have concluded are nothing more than loss leading compliance cars.”

      That’s not true. Most of them are saying they can make money on EVs now.

      • 0 avatar
        Master Baiter

        “That’s not true. Most of them are saying they can make money on EVs now.”

        Yes, at $50-70K they can make money. I’m not questioning that. The question is, how many people are willing to pay $70K for a smallish car with a bare bones interior that is inconvenient to take on a road trip? People are irrational. They think they need a 4WD truck because they might need some mulch from Home Depot.

  • avatar
    mcs

    Now VW’s (yeah I know) Herbert Diess is saying “We will come in 2020 with vehicles that can do anything like Tesla and are cheaper by half.” I’m really optimistic about the pace of EV development, but seriously, we’d have to have $50 per kWh battery packs and I’m not convinced prices will be that low a year and a half from now. VW is also saying production will be 1,500 per day at Zwickau.

    https://electrek.co/2018/10/26/vw-ceo-electric-vehicle-tesla-half-price-2020/

    • 0 avatar
      krhodes1

      The difference is VW can afford to lose a massive amount of money selling them to gain market share. It’s all just penance for dieselgate until costs align with reality.

  • avatar
    Kendahl

    I expect the feds have to conduct their investigation. However, anybody who fails to take Musk’s predictions with more than a grain of salt is also a good candidate to buy one of New York City’s bridges. I know two owners of Tesla S cars. One just likes and can afford interesting cars. The other, who was looking forward to trading up to a P100D for its ludicrous mode, could afford Ferraris if he wanted. I’d be interested if I could get past the range / recharging time issue on long trips.

  • avatar
    SCE to AUX

    Will the Feds investigate Buick for over promising sales of the Cascada?

    Isn’t it better to have insatiable demand and meet it late, than no demand with unsold cars sitting around for two model years?

  • avatar
    TimK

    The investigation will not result in any criminal indictments. It will however supply enough ammunition so the board can fire Elon and sell/merge the company before it implodes.

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