I Hope Very Much That EM and Tesla Management is Attuned to SEC Message

[barjohn]

Here is an article that alludes to the recent Silicon Valley saga concerning Theranos and Elizabeth Holmes. Was The SEC Sending Tesla A Message? It is the author's view that the SEC is sending Elon and Tesla a message.

Jina Choi, Director of the SEC’s San Francisco Regional Office, added the following:

“The Theranos story is an important lesson for Silicon Valley. Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday."
Publicly held companies are held to higher and more difficult standards than privately held companies. It's ok to talk about what you want in the future as long as you don't sell it as a feat accompli.

I own a Tesla and I want the company to succeed. I also own Tesla stock. I think innovators like Elon are essential to the success of a company like Tesla, which is why I voted for his compensation package. However, I worry that Elon has promised more than he can deliver in the time frame he has given. The time frame has to be based on realistic assessments based on resources and financial commitments and not just wishful thinking. There is a difference between saying we have a finished product we can demonstrate and we are waiting on regulatory approval and we don't know when we will have regulatory approval so we can't tell you when we will be able to supply the product functions you have paid for. As an example, I managed a large software development project for the Navy. I couldn't guarantee when I could deliver it to the fleet do to the numerous political and bureaucratic obstacles; however, I could guarantee when I would deliver the functionality I had specified in the product and that it would meet or exceed the performance standards specified.

 

[30seconds]

Uh there is a massive difference. One company promised a revolutionary product, was private and didn’t let anyone see how the product was made or how it works. The other promised a revolutionary product, has all the internal financial and external auditing REQUIRED by the SEC, and has delivered a product that anyone can see how it works or how it is made.

Companies are allowed to aim for high and hard goals. They are allowed to miss on timing or even fail to meet those goals as long as their disclosures and risk factors are accurate.

Tesla does not promise profit and Elon has repeatedly stated how risky the business is.

 

[barjohn]

I hope you are right but I also know how lawyers think and if you look at Tesla's web site you could be led to believe that FSD is already here in there vehicles. Those of us that own the cars know this is not the case but the general public might be misled. One has to be careful not to put oneself in a position where it can be said that you were trying to mislead the public. Especially, if the web site is coupled with the Tesla video that was made that makes it look like the car is driving itself through city streets and on a planned GPS route.

 

[FlatSix911]

Nonsense ... Theranos was a very different company than Tesla

 

[cpa]

Tesla will always refund our deposits before we confirm. They are recorded as liabilities on the books. Once we confirm we have to pony up more money that Tesla clearly says will be forfeited if we cancel. Tesla does not ask for the balance due until shortly before delivery. Tesla does its best upon delivery to correct minor defects or blemishes. More major issues are taken in and resolved (maybe not a quickly as we would like, but they do get resolved.)

Yeah, Tesla has not delivered on selected options that are paid for in advance. But in the greater scheme of things these amounts are not material to the overall price of the vehicle, and they do not interfere with the normal and ordinary use of an automobile. They are just options that will make driving safer or less stressful. Since we have not purchased these fancier options, I do not know if Tesla made hard-and-fast promises that they would be available "soon" or not.

Sure, there have been other promises made like the Supercharger expansion, the quantity of Model 3s to be produced, the opening of new service centers that have not been fulfilled. But I believe that overall Tesla has operated in good faith. Perhaps not necessarily "best" faith (funds may be diverted from one budgetary area to another as management sees fit), but they do make substantial progress each year.

So, with my limited knowledge of both situations, I do not think that Tesla is in the same situation as Theranos.

 

[bonnie]

I hope you are right but I also know how lawyers think and if you look at Tesla's web site you could be led to believe that FSD is already here in there vehicles. Those of us that own the cars know this is not the case but the general public might be misled. One has to be careful not to put oneself in a position where it can be said that you were trying to mislead the public. Especially, if the web site is coupled with the Tesla video that was made that makes it look like the car is driving itself through city streets and on a planned GPS route.

Tesla has a good legal department with specialists in contract law, regulatory, liability, international, and financial compliance (including SEC).

 

[patrick40363]

2 different type of companies.

 

[daniel]

I know nothing about Theranos, what it does, what it did, what kind of trouble it got into. And I know next to nothing about the SEC. Elon Musk is a smart cookie and I'm sure his lawyers will keep him on the right side of the law.

That said, Musk is also extremely exuberant and enthusiastic and optimistic, and I read a quote of him saying that FSD was only a year away. I suspect that he was expressing his hope, not an actual promise, but to paraphrase an old saying, When Elon Musk speaks, people listen, and it sounded to my lay ears, and I'd imagine to a lot of other people, as though he was saying that Tesla cars would be operating FSD in a year.

I don't think that's a realistic timeline. People familiar with Tesla know that it delivers the best cars on the road significantly later than its goal date. I think Musk would do well to qualify some of his statements with "I hope" rather than "we will."

And I'd still like to meet him so that I could thank him for building the Roadster that was my daily driver for almost 7 years, and now the Model 3 that's replacing it. I loooooooooooooooooove driving electric, and he's the guy that made it possible for me to move from a three-wheel death trap capable of zero to 35 mph in 31 seconds, to a proper car and say good riddance to gasoline.

 

[tander]

I hope you are right but I also know how lawyers think and if you look at Tesla's web site you could be led to believe that FSD is already here in there vehicles. Those of us that own the cars know this is not the case but the general public might be misled. One has to be careful not to put oneself in a position where it can be said that you were trying to mislead the public. Especially, if the web site is coupled with the Tesla video that was made that makes it look like the car is driving itself through city streets and on a planned GPS route.

I think the way to look at it is Theranos has a great idea, and they pretty much said they had accomplished it, but very little actual progress made in that direction and they raised a lot of money based on that falsehood (hopefully they or someone follows through on it because it's still a great idea). With Tesla it's a great idea, but the distinction is they are late on when they said they'd accomplish it, not that they said they had accomplished it. And also they have kind of fudged things on the timeline with people that put down for autopilot, but they haven't really fudged investors into higher valuations or something based on it. And to be fair, they've made quite a bit of progress, and it's likely more developed than what is in people's cars currently, but it's still annoying. But that's the price you pay for not doing any actual paid marketing, Musk says all this stuff that makes headlines and gets all kinds of free advertising. As a consumer it's been kind of a bait and switch paying for autopilot, but as an investor think of all the money they've saved on marketing and instead plowed into engineering. I'm not a big fan of advertising but at this point I kind of wish they'd just start doing normal commercials and keep stuff like autopilot in stealth mode till it's ready for prime time.

 

[Grendal]

I hope you are right but I also know how lawyers think and if you look at Tesla's web site you could be led to believe that FSD is already here in there vehicles.

I don't see how this can be interpreted. Here is the text for Model X:

"Autopilot provides a stress-free driving experience—with advanced safety and convenience features designed to assist you with the most burdensome parts of driving. Model X comes standard with advanced hardware capable of providing Enhanced Autopilot features today, and full self-driving capabilities in the future."

The bold is mine and the same text appears for Model S.