Tesla Faces Criminal Probe Over Model 3 Production Claims

Tesla Faces Criminal Probe Over Model 3 Production Claims

Troy Powers
October 28, 2018

As far as revenue is concerned, Tesla during the quarter generated $6.8 billion in revenue, easily besting estimates from analysts on Wall Street.

Despite the strong showing, doubts will still hang over Tesla until Musk can prove that the company can consistently make money and realize its production goals.

An article published by the Wall Street Journal titled "Tesla Faces Deepening Criminal Probe Over Whether It Misstated Production Figures" claims that agents from the FBI are investigating whether or not Tesla misstated information about the production of its Model 3 sedans, misleading investors in the process.

The latest information may be part of a larger inquiry that investigators began earlier this year, although neither the Justice Department nor the FBI have confirmed that they are investigating Tesla, which is common among federal agencies.

A Tesla spokesperson said the company cooperated with a "voluntary request" for documents from the Justice Department earlier this year but has had no additional requests for months.

Third quarter materially de-stresses Tesla's balance sheet and could support more leverage if the company can demonstrate more than one quarter of healthy free cash flow generation and sustained demand for Model 3.

Musk acknowledged in April that Tesla had attempted to automate too many production tasks at the Fremont factory and would use more human workers in the assembly process.

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In addition, building the duo in China will allow Tesla to avoid tariffs on Model 3 and Model Y vehicles it sells in China, which it would otherwise have to face if it imported them from another country. "So we're driving to have Model 3 production for the China market or the Greater China market active certainly next year".

The company earned $311.5 million during the three months ending in September, swinging from a loss of $619 million at the same time a year ago. We are enormously proud of the efforts of the whole company in making it through this hard ramp and getting us to volume production.

Musk meanwhile will be replaced as Tesla's chairman imminently after a ruling from the SEC that also saw the South African-born entrepreneur hit with a fine of $20 million (£15.6 million).

The usually freewheeling Musk was unusually restrained through most of the call with analysts, although he occasional broke into some braggadocio. But Wood's biggest hopes for the company concern software, and she worries those lofty mobility-as-a-service goals won't come to fruition if Tesla goes private.

Tesla is facing a criminal investigation into whether the electric car-marker misled investors by overstating production forecasts for its Model Three Sedan. It has been the first positive cash flow since Q3 of fiscal 2016 and a positive figure for only the third time in the company's historic record.

"Model 3 was the best-selling auto in the U.S. in terms of revenue and the 5th best-selling vehicle in terms of volume".