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Tesla under "deepening" FBI investigation over production targets: reports

Tesla's tough year might be about to get tougher
Andrew Chesterton
Contributing journalist

30 Oct 2018 • 3 min read

Tesla's tough year might be about to get tougher, with media reports today claiming the company was under a "deepening" FBI investigation over its Model 3 production targets.

Reports out of the Wall Street Journal claim Elon Musk's Tesla is the subject of a Department of Justice investigation into its much publicised production targets, with the FBI now allegedly talking to Tesla employees about the targets.

At issue is whether the company's public production targets for the brand's Model 3 were wilfully inaccurate and designed to mislead investors. The publication points to claims made by the company - largely via Musk - that Tesla could be producing 20,000 Model 3s a month by December 2017.

That target proved optimistic, with the brand finally hitting its 5000 per week target for its Model 3 in July 2018. A last-minute rush to the finish line, including opening a new production line inside a giant tent at the company’s factory in Fremont California, saw Model 3 number 5000 for the week pass through the quality control checking station five hours after the deadline had technically expired.

"Earlier this year, Tesla received a voluntary request for documents from the Department of Justice about its public guidance for the Model 3 ramp and we were cooperative in responding to it," a Tesla representative told the publication. "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."

"When we started the Model 3 production ramp, we were transparent about how difficult it would be. Ultimately, given difficulties that we did not foresee in this first-of-its-kind production ramp, it took us six months longer than we expected to meet our 5,000 unit per week guidance."

It's been a rocky road for the EV company of late, with Musk forced to resign his position as Tesla chairman in early October after being charged by the Securities and Exchange Commission over a series of Tweets suggesting he might take the automotive company private.

In settling the fraud case, Musk retained his CEO position, and so still runs the company, but Tesla has agreed to monitoring of Musk’s future communications, and will pay a sizeable US$20m fine.

But in good news for Tesla, reports today suggest any case being investigated would be almost impossible to prove.

"We think it will be difficult for prosecutors to prove criminal wrongdoing," one analyst said. "Investigators would need to find evidence TSLA made projections it knew would be impossible to achieve, which we believe is a high bar to meet."

Today's news was followed by Tesla finally recording its long-promised profit, with third-quarter results showing the manufacture had at last landed in the black, with a reported profit of $311.5 million for the quarter.

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