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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Artful Dodger
"Neko no me"
Model 3 components made or assembled in China for use at Fremont will be subject to the 25% tariff. For example, the new FSD computer will not be exempt:
Trump Denies Tesla Tariff Exemption For Autopilot ECU | CleanTechnica
The $5K EV incentive in Canada is a rebate. Canadians don't need to owe any Federal Income tax to receive the $5K EV rebate. You just need to be a Canadian resident (ie: be a Tax Filer, but not necessarily to owe any taxes to get the rebate).
And there's another $8K rebate in Quebec, which is more than the $5K offered in B.C.
But even in Alberta, EV buyers come out ahead because there is no provincial sales tax, just the 5% GST. On a $55K Model 3, GST would be $2,750 so still come out net ahead on taxes for EVs.
Other provinces charge HST (blended Fed+Prov. sales tax) which brings net taxes to slightly positive at time of purchase, but keep in mind the much higher fuel taxes paid by Canadians (avg 33% of fuel cost). So EVs are taxed much less everywhere in Canada.
Note its just the Model 3 SR+ that is eligible for the rebate, not Tesla's more expensive vehicles. But this bread'n'butter electric sedan will sell in huge numbers here in Canada. And save Canadians huge amounts of money, tax, and emissions. 3x FTW.
Finally, there is already a provision in Transport Canada's policy for a higher allowable base-price for 7-seat EVs. So a 7-seat Model Y with a MSRP of up to $60K CAD might also be eligible for the $5K rebate. I'll be having that when the time comes.
Cheers!
So can ASP/FSD be added at a later date via a software update?
In my spreadsheet I always assumed S+X sales will be flat at 100k, even in year 2030. That's because there are limited number of people who are able to (and willing to) buy at that price range. If autonomous driving gets more advanced and no better alternatives, then higher number is very likely. I leave that out of my calculation. I think in the long run, S+X will only account for 2~3% of Tesla's business.
Model 3 and Y are different (also Pickup and Semi). EVs will save quite a bit on gasoline and maintenance cost. A $50k EV is comparable to a $40k ICE vehicle in total cost of ownership, but user experience is much better. Likewise a $40k EV has an ownership cost like a $30k ICE car. Based on this view, I think half of world vehicle demand will switch to EV when the following conditions are met: 1. buyers are well informed; 2. better charging infrastructure; 3. battery technology continues to improve and reduce cost by 6~8% a year. All of these will happen. It's the timing I try to guess.
I guess by 2022, worldwide EV demand will exceed 10 million a year. Tesla gets 30% of that demand.
By 2025, worldwide EV demand will exceed 25 million a year, Tesla gets 25% of that demand.
So I'm predicting 3 million Tesla demand in 2022, 6 million demand in 2025. They probably will not be able to produce that many.
The above numbers assume nobody gets FSD out. If someone gets FSD out, then the numbers will be quite different.
Shorts crowd sourced an SEC complaint letter: SEC Inspector General
[Your Name]
[Your Address]
[Your Phone Number]
Fax: [Optional, Your Fax]
E-Mail: [Your E-Mail]
E-Mail Instructions: Download, modify, sign, and send this letter to the following individuals. A PDF is probably the best way to send it. If you don’t want to scan your signature, you can sign with a digital signature like this:
/s/Your Name
Just put the /s/ in front.
To: [email protected]
CC: [email protected],
Nicklas Akers <[email protected]>,
Robert Rees <[email protected]>,
Stephen Buchholz <[email protected]>,
Erin Schneider <[email protected]>,
Cheryl Crumpton <[email protected]>,
Samuel Levine <[email protected]>,
Erie Meyer <[email protected]>,
Dan Bernal <[email protected]> (or your representative in Congress),
Rohini Kosoglu <[email protected]> (or your Senator’s chief of staff),
David Grannis <[email protected]> (or your Senator’s chief of staff)
Also feel free to e-mail [email protected] to show that you sent it!
May 13, 2019
Via Electronic Mail
The Honorable Carl W. Hoecker
Inspector General
Securities and Exchange Commission
Washington, D.C. 20551
RE: Request for Investigation into SEC’s Handling of Matters Concerning Tesla, Inc. and Elon Musk
Dear Mr. Hoecker:
I write to request an investigation of the SEC’s handling of numerous matters pertaining to Tesla, Inc. (NASDAQ: TSLA, hereinafter “Tesla”) and its CEO, Elon Musk. Tesla has been one of the most popular and controversial investments for retail investors in recent years. However, investors are unable to make informed decisions about the company or its prospects in the face of a growing number of misleading and conflicting statements, many of them outright lies, by Mr. Musk, which have become so audaciously bold as to demand immediate regulatory intervention. Yet, with narrow exceptions, the SEC has been silent.
Thus far, the SEC has intervened publicly on account of only one of Mr. Musk’s lies: that he would be taking the company private at $420.00 per share, and that he had “funding secured” to do so. This false post on Twitter, visible to Mr. Musk’s tens of millions of followers, resulted in two civil actions: one against Mr. Musk (New York Southern District Court, Case No. 1:18-cv-08865-AJN) and one Tesla, Inc. (New York Southern District Court, Case No. 1:18-cv-08947-AJN). Unfortunately, these actions barely scratched the surface of the unlawful acts perpetrated by the company and its chief executive. This letter should serve as a reference for the outstanding issues the SEC has yet to resolve.
For each issue raised herein, the Officer of the Inspector General should investigate why the SEC decided not to take action, or why action has been delayed. In previous cases with far less obvious violations of securities law, the SEC has intervened. Here, numerous investors have already been harmed. Furthermore, and most importantly, drivers of Tesla vehicles have lost their lives because of the falsehoods Mr. Musk has been permitted to widely disseminate unchecked, and especially those about the ability of Tesla vehicles to drive themselves.
It should further be noted that due to the intense public interest surrounding Tesla, if the SEC fails to take any further action, the corroding effect on the public’s trust in capital markets could be severe. As of the date of this letter, Tesla is a financially unsound company with a market capitalization hovering around $45 billion. If the company fails, it is a foregone conclusion that many tens of thousands of jobs will be lost. Morgan Stanley analyst Adam Jonas says that Tesla’s $2.7 billion in fresh capital is only “a 12-month bridge.”
Regulation requires a long-term outlook. The SEC should view its job as protecting the integrity of U.S. public markets, as well as minimizing shareholder losses that might result from avoidable illegal practices, while avoiding the moral hazard that “safety and soundness” practices necessarily create. The SEC’s job is not protecting shareholders from losses by turning a blind eye to illegal practices designed to artificially inflate a company’s stock price in the short term. Nor does the SEC exist to protect companies themselves or their executives who are on a “hunt for profit,” as suggested by Commissioner Hester Peirce.
Nearly twenty years ago, the failure of Enron was a definining moment for the SEC that highlighted its colossal failures. If nothing is done, I am of the opinion that Tesla’s failure may ultimately prove to be similarly devastating for the public’s trust in the SEC.
Indicia of Accounting Fraud
On November 8, 2018, Tesla employee Salil Parulekar was indicted for wire fraud in the Northern District of California due to his work in Tesla’s accounting department. Weak internal controls at Tesla allowed Mr. Parulekar to intentionally redirect millions of dollars to the wrong vendor.
Only two months before, Tesla’s Chief Accounting Officer, Dave Morton, resigned after only one month on the job. Tesla Chief Financial Officer Deepak Ahuja resigned not long after with a surprise announcement at the very end of the company’s January 30, 2019 Q4 2018 earnings call.
With this background, it is important to note that analysis of the tables provided in Tesla’s Form 10-Q and 10-K filings from Q1 2016 through Q1 2019 in the “Note 5 – Inventory” section (page 18 in the most recent Form 10-Q) suggest evidence of accounting fraud. In both Q3 2017 and Q1 2019, Tesla reported a “Work in process” line item of exactly $277,175 (numbers in thousands). This exact number also happens to be the median for all “Work in process” values from Q1 2016 through Q1 2019. Either this is a stunning coincidence, Tesla’s reported numbers are somehow incorrect in a manner that might be explained by a repeated spreadsheet error, or accounting fraud is taking place.
The SEC has a clear and immediate obligation to investigate.
False Statements by Elon Musk
The SEC has a duty to ensure that regulated earnings calls and investor communications generally contain accurate information to the maximum extent possible. This has not happened in the case of Tesla.
October 24, 2018 Q3 2018 Tesla, Inc. Earnings Call
During the regulated earnings call on October 24, 2018, Mr. Musk claimed, “This quarter, we started rolling out Version 9.0 of our software which is the biggest software upgrade in three years. And Model 3 received a 5-Star safety rating in every category and subcategory. And it got less probability of injury of any car that the U.S. government has ever tested.” In fact, according to what NHTSA told Reuters, “NHTSA does not distinguish safety performance beyond the star rating with five stars being the highest safety rating a vehicle can achieve. Thus, there is no NHTSA ‘safest’ ranking within the five-star category.”
Mr. Musk and Laurie Shelby, Tesla Vice President, EHS, also made statements on the call regarding the manner in which Tesla provides healthcare for employees who work at its Fremont, California factory:
“...We’ve also just opened a new and improved health clinic, so when injuries do occur we get the absolute best care for our associates. And it’s actually overseen by one of California's leading orthopedic surgeons. And we did that, because most of our injuries, like we said like 80%, 85% are those sprains and strains. So now they get that best care here on site. And we have 24/7 care. We are actually staffed by three full-time doctors and nurses. And I am really super happy with the care they’re giving, and I think the employees are as well.”
Not mentioned by Ms. Shelby was that one of the doctors hired by Tesla’s contractor, Access Omnicare (a DBA name for a hand surgeon named Dr. Basil Besh), Dr. Muhannad Hafi, was facing revocation of his medical license at the time he was hired. His license was formally revoked by the California State Medical Board on December 21, 2018 for having sexually assaulted numerous prior patients. Another doctor whose name appears on Access Omnicare medical records provided to investigative journalism outlet Reveal worked for Access Omnicare for all of one week.
Mr. Musk’s statement that Tesla’s medical care was “the absolute best” could therefore not possibly be true, as no objective observer would consider an unlicensed sex offender and an absent physician to be “the absolute best” health care providers available. Mr. Musk went on to refer to Access Omnicare as “a really immediate first-class healthcare available right on the spot, when people need it. And this not just for workplace, this for workplace and non-workplace.” Reveal’s reporting suggests that this too was a lie. In fact, Tesla was sending employees to the hospital in Lyft vehicles to avoid having to report injury statistics or pay for ambulance trips. Nonetheless, Ms. Shelby described Tesla’s care practices as “super exciting” on the call.
Mr. Musk went even further, stating, “if you like become injured right off for any reason then there is healthcare immediately on site.” In fact, Tesla’s on-site medical facilities were and are quite limited, requiring frequent transportation to actual health care facilities.
Investors listening to these false statements might have been reassured that Tesla had its workplace injury program under control. In reality, it was fined by CalOSHA numerous times for violations, and its practices have led to no fewer than 47 employment related lawsuits according to PlainSite.
January 30, 2019 Q4 2018 Tesla, Inc. Earnings Call
By January 30, 2019, Mr. Musk knew or should have known that the pace of Model 3 sales were drastically slower in January than they had been during Q4 2018. On December 31, 2018, a federal tax incentive for electric vehicle purchases expired, eliminating a significant incentive for potential customers to purchase Tesla vehicles. Despite the knowledge that sales had slowed markedly, Mr. Musk still assured investors on the earnings call that future demand looked strong. On the call, with 30 days of sales data at his disposal, he nonetheless stated, “I’m optimistic about being profitable in Q1 and all quarters going forward.”
Three months later, Tesla announced a $702 million loss, which would have approached $1 billion had the company not factored in one-time sales of emissions credits—a far cry from profitability.
The SEC has not signaled that it has any concerns about Mr. Musk’s deliberately false and misleading January 30, 2019 statement, which undoubtedly had a positive effect on the company’s stock price.
April 24, 2019 Q1 2019 Tesla, Inc. Earnings Call
On Tesla’s Q1 2019 earnings call, Mr. Musk declared, “We expect to return to profitability in Q3 and significantly reduce our loss in Q2,” once again reversing his previous prediction of a profit made only weeks prior (see “February 28, 2019 ‘Media Call’” below). Yet again, Mr. Musk likely knew this statement to be false at the time he made it, but sought to increase Tesla’s declining stock price.
Mr. Musk also made the compound false statement, “All Tesla class vehicles today have all the hardware necessary for full self-driving and over-the-air updates will enable our customers to use the Tesla ride-hailing network fleet and generate income, which as we said on Autonomy Day a few days ago we think is somewhere between $10,000 and $30,000 a year, in some cases, perhaps more.” Multiple experts agree that Mr. Musk is wrong about his claim that Tesla vehicles are capable of “full self-driving,” to the point where Consumer Reports issued a press release disputing this claim due to the immediate safety risk it poses to drivers. Mr. Musk’s claim about a “Tesla ride-hailing network” was similarly based on no actual evidence.
Mr. Musk did not stop there. He also made the outrageous claim that, “…in 2020, we expect to have a million robo-taxis on the road with the hardware necessary for full self-driving.” This will be nearly impossible to achieve, since Tesla vehicles do not have the hardware necessary for full self-driving.
It is puzzling that the SEC has not signaled any issue with any of these false claims.
Restricted Access Conference Calls in Violation of Regulation FD
Tesla has now held several conference calls for the purpose of distributing information material to shareholders that has not been made available to the public as required by Regulation FD, 17 C.F.R. § 243. The regulatory violations here, as elsewhere, have been brazen.
February 28, 2019 “Media Call”
Immediately following the SEC’s February 25, 2019 motion to hold Mr. Musk in contempt of court, Mr. Musk posted a series of tweets on February 26th designed to intentionally mislead shareholders into believing that there was some potentially positive new announcement coming at 5:00 P.M. EDT on February 28, 2019. In his words, across three separate posts, “Thursday 2pm / California / Some Tesla news.”
Tesla shares rose approximately 7% over the next two trading days. At 5:00 P.M. on the 28th, Mr. Musk led an invite-only conference call for certain reporters. The Los Angeles Times later described the call in the following manner in an article entitled, “Tesla’s Elon Musk, facing contempt charges, says semi-secret meeting was a mistake:”
“During the call, in which a cheaper version of the Model 3 electric sedan was announced, Musk said the company would be closing its retail stores and that it would not, as originally forecast, post a profit for the current quarter. Participants were told not to post recordings of the proceedings, and after the meeting Tesla said a recording or transcript of the meeting would not be made available to the media or the general public.”
Tesla’s initial refusal to make a recording or transcript of the call available is a clear violation of 17 C.F.R. § 243.100(a) (“…the issuer shall make public disclosure of that information as provided in § 243.101(e): (1) Simultaneously, in the case of an intentional disclosure; and (2) Promptly, in the case of a non-intentional disclosure.”) This intentional disclosure was neither simultaneous nor prompt.
Despite widespread publicity about this state of affairs, the SEC took no visible action to follow up. Later, Tesla did post a recording and transcript of the call, but was not reportedly required to pay any sort of penalty. The transcript includes the quote, attributed to Mr. Musk, “We do not expect to be profitable in Q1. But we do think that profitability in Q2 is likely.” This came only a month after Mr. Musk had expressed his optimism about a Q1 profit. Again, by the time of this statement he had enough data about demand for Tesla vehicles to know that a Q2 2019 profit would be nearly impossible. As mentioned previously, he was forced to walk this statement back only a few weeks later.
Mr. Musk also stated, “I’m certain we’ll be feature complete with full self-driving this year.” He knew or should have known that this statement was false.
The SEC should have been aware of the statements on this call well before it argued to hold Mr. Musk in contempt of court. Yet for some reason, these extremely concerning issues were not brought to the attention of Judge Alison Nathan, and the SEC’s settlement agreement with Mr. Musk was ultimately amended in April with no further penalty or admission of wrongdoing from Mr. Musk.
May 2, 2019 Tesla, Inc. Secondary Offering Call
On May 2, 2019, Tesla held a conference call regarding its imminent issuance of common shares via a secondary offering, which also included the issuance of convertible bond notes. This conference call was similarly “secret” in violation of Regulation FD. Based on leaked information, on this call, Mr. Musk made a number of completely outrageous statements:
The projection that Tesla would soon achieve a market capitalization of $500 billion;
That Tesla vehicles “appreciate” in value over time to the tune of $150,000 to $200,000 in three years, despite all evidence indicating the exact opposite (as is the case with any automobile);
Collision repairs “in a matter of hours” despite the fact that reports of missing Tesla spare parts are widespread.
As of the date of this letter, it does not appear that the SEC has forced Tesla to disclose a recording or transcript of the call. Nor has the SEC followed up by requiring Tesla to explain the basis for its statements.
“Autonomy Investor Day”
“Full Self-Driving” (FSD) Terminology
Mr. Musk has falsely referred to Tesla’s driver assistance technology as “full self-driving,” often abbreviated as FSD. Tesla cars equipped with the company’s “AutoPilot” feature cannot, in fact, drive themselves. Nor has Tesla achieved “Level 5” autonomy, despite Mr. Musk’s promises to the contrary. Tesla AutoPilot has caused several accidents, some fatal.
As previously noted, the abuse of language by Tesla and Mr. Musk has been so shocking that consumer watchdog group Consumer Reports issued a press release after Tesla’s April 22, 2019 Autonomy Investor Day entitled, “Consumer Reports: Tesla Must Prove Safety Before Claiming “Self-Driving” Ability.”,
Mr. Musk’s false claims about a technology that has already resulted in the loss of life are alarming, and the SEC’s lack of interest and action in stopping further similar claims is similarly alarming.
“We Just Randomly Threw Some Numbers On There”
During the Autonomy Investor Day, Mr. Musk claimed that Tesla’s new destiny as a robo-taxi company would result in Tesla owners earning money from their cars’ ability to drive themselves. When questioned about how the company reached its conclusions, Mr. Musk responded, “We just randomly threw some numbers on there.”
If Tesla did in fact just use numbers with no basis in fact to mislead investors, this would be a flagrant violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5. The SEC should investigate.
Social Media
Vehicles Appreciate In Value
On April 12, 2019, in an interview broadcast on YouTube with a self-described machine learning expert, Mr. Musk stated, “Buying a car today is an investment into the future. I think the most profound thing is that if you buy a Tesla today, I believe you are buying an appreciating asset—not a depreciating asset.” This statement is part of a pattern of false, misleading, and deceptive communications. Thus far, the SEC has failed to take meaningful action to stop Mr. Musk from making such statements.
Robo-Taxi Fleet Assertions
To distract from Tesla’s impending insolvency, Mr. Musk began tweeting about the far-off possibility of deploying a “fleet” of one million self-driving robo-taxis in 2020 based on existing vehicles already sold to consumers, which could be repurposed on demand to serve as taxis if necessary.
Yet no reference to robo-taxis ultimately appeared in the company’s secondary offering prospectus. Experts at MIT doubt that such a service would be cost effective. As with many of the company’s and/or Mr. Musk’s statements, the true purpose of this communication was to pump up a flagging stock price based on false information. This is another flagrant violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5. The SEC should investigate.
Tesla Brake Pads “Literally Never Need To Be Replaced”
On December 26, 2018, Mr. Musk wrote on Twitter, “Brake pads on a Tesla literally never need to be replaced for lifetime of the car.” This was also part of the aforementioned pattern of false, misleading, and deceptive communications. The SEC should force Tesla to disclose how many brake pads it has replaced in its vehicles according to its ERP systems.
Already Sold Vehicles Have Everything Necessary For Level 5 Self-Driving Capability
On March 24, 2017, Mr. Musk wrote on Twitter, “All Tesla cars built since Oct last year will be capable of self-driving as software improves.” Mr. Musk repeated this claim on April 22, 2019 by stating on Twitter, “All cars made since Oct 2016 either have the hardware needed for FSD or are trivially upgradeable.” These statements are part of the aforementioned pattern of false, misleading, and deceptive communications. Thus far, the SEC has failed to take meaningful action to stop Mr. Musk from making such statements.
Deposit Refund Policy
Mr. Musk has made several different claims on Twitter about Tesla’s refund policy. On January 9, 2019, he wrote, “Btw, you can buy a Tesla online in less than 2 mins & give it back for a full refund for any reason Tesla.com.”
PlainSite has tracked at least 16 lawsuits over Tesla refusing to honor customer deposit refund requests filed by customers or potential customers. It has also uncovered complaints filed with Attorneys General of multiple states, including Ohio, Florida and Texas, regarding deposit refund failures. Mr. Musk’s statement is part of the aforementioned pattern of false, misleading, and deceptive communications. Thus far, the SEC has failed to take meaningful action to stop Mr. Musk from making false statements.
Settlement Negotiations
Several court filings signed by Mr. Musk in Case No. 1:18-cv-08865-AJN, such as Document Nos. 42 and 44, lacked any contact information for Mr. Musk’s counsel or Mr. Musk himself, in clear violation of Federal Rule of Civil Procedure 11(a). Before these documents were filed, Mr. Musk had been represented by counsel, yet there is no mention of Mr. Musk’s counsel in the substance of these status update documents or in the deficient signature blocks. These documents were submitted to the court’s CM/ECF system by the SEC, not by Mr. Musk or his counsel.
This raises a number of questions. Why did the SEC allow Mr. Musk to sign his name to a court document without providing his contact information as required by Rule 11? Was Mr. Musk represented by counsel as he negotiated with the SEC? If so, why was his counsel not on the court mandated conference call(s), according to the SEC’s recounting, and why did counsel not sign the status updates? If not, why did his counsel not follow Civil Local Rule 1.4 and withdraw from the case after obtaining Judge Nathan’s permission? Why did the SEC turn a blind eye to these rule violations?
Perhaps most importantly, if Mr. Musk was not represented by counsel as he negotiated with the SEC, why were investors not made aware of this material fact? Few investors would want to put their money into a multi-billion dollar company where the CEO could be foolish enough to represent himself pro se before a regulatory agency while attempting to avoid a contempt of court charge.
These questions demand answers.
False and Concerning Statements by Tesla, Inc.
Not every false statement has been issued by Mr. Musk himself. Some have come from the company through its employees and spokespeople.
The “Factory Gated” Vehicles
In June 2018, Tesla proclaimed that it had met its self-declared target of producing 5,000 Model 3 vehicles per week by producing vehicles of such inferior quality that reportedly 86% of them had to be re-worked. These vehicles were reported to have been “factory gated,” with no clear definition of what that unusual term actually meant. The issues surrounding Tesla’s Model 3 production abilities are reportedly the subject of an ongoing Department of Justice probe.
“Zero Emissions” License Plates
For years, Tesla vehicles have sported temporary license plates that are actually advertisements stating, “ZERO EMISSIONS.” The notion that Tesla cars can be manufactured and operated without contributing any carbon dioxide or other emissions to the environment is patently false. Electric vehicles simply move the source of emissions from the tailpipe to the electricity producer.
Often, the electricity producer is actually Tesla itself. On March 6, 2019, PlainSite published a photograph of Tesla Model 3 vehicles being charged at Tesla’s Burlingame dealership with two portable MQ Power WhisperWatt DCA300SSJU4F2 diesel generators rented from Hertz Rentals. In fact, Tesla dealerships and inventory lots nationwide routinely use diesel generators, which generate toxic emissions, to re-charge Tesla vehicles in the company’s steadily growing inventory.
Chinese Customs Dispute
On March 5, 2019, the Chinese English-language publication Caixin published an article with the headline “China is currently holding 1,600 Teslas at customs,” setting off a plunge in Tesla’s stock price. This news was picked up by Reuters and syndicated to other financial news websites such as CNBC.
Later on March 5th, Reuters published a second article announcing that the issue in China had been resolved, immediately lifting Tesla’s stock. The article was based on a single source “familiar with the matter,” who convinced Reuters that “China’s customs authorities have accepted electric carmaker Tesla Inc’s plan to remedy problems.” An initial version of the Reuters article suggested that the source was a Tesla employee. In fact, the issue remained unresolved for weeks. On March 14th, Bloomberg published a much more detailed article explaining that China had finally cleared Tesla vehicles to proceed through customs.
If in fact Tesla deliberately provided false and/or misleading information to the press, a material and significant violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5 took place. Yet the SEC does not appear to have taken any steps to investigate.
Corporate Blog
On September 7, 2018, Tesla posted a public update based on an “internal” e-mail message to employees. Referring to Q3 2018, this update claimed that, “We are about to have the most amazing quarter in our history, building and delivering more than twice as many cars as we did last quarter.” This proved to be false: according to Bloomberg, Tesla produced 28,578 Model 3 vehicles in Q2 2018, and 53,239 Model 3 vehicles in Q3 2018. Twice the Q2 2018 production figure would have been 57,156 vehicles, or 7.35% more than were actually produced. The post also made unsubstantiated claims about the electric vehicle battery market share of Tesla’s Nevada-based factory.
Despite the obvious falsehoods, these statements were never publicly challenged or questioned by the SEC.
Twitter
“Unusually High [Order] Volume”
On March 19, 2019, the official @tesla Twitter account claimed, “Due to unusually high volume, Tesla was unable to process all orders by midnight on Monday, so the slight price rise on vehicles is postponed to midnight Wednesday.” (This post was also re-tweeted by Mr. Musk’s personal @ElonMusk account.) There was no evidence for this suspicious claim at the time, and the company’s Q1 2019 financial report confirmed it to be a two-part lie: Tesla’s servers were fine, and there was no spike in order activity that caused them to experience any problems.
As with many of the company’s and/or Mr. Musk statements, the true purpose of this communication was to pump up a flagging stock price based on false information. This is a flagrant violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5. The SEC should investigate.
“mmm ok”
On May 7, 2019 at 1:00 P.M., the Tesla Twitter account wrote, “The world of autonomous driving is coming whether you want it or not. With a Tesla, you’re ready for it.” A Twitter user responded with, “Ok please don’t kill my family,” and in turn, the Tesla Twitter account replied, “mmm [Double Line Break] ok”.
Aside from the inappropriateness of a major auto manufacturer publicly joking about the prospect of killing someone’s family with one of its products, the Tweet is questionable because it was authored in the cheeky style of Tesla’s CEO, who is forbidden from using Twitter without pre-approval pursuant to his settlement with the SEC. The @tesla account has posted other tweets in this immature style throughout May 2019, strongly suggesting authorship by Mr. Musk without pre-approval. For example, on May 9, 2019, the @tesla account wrote, “Hands up if you've ever blamed your own emissions on Fart Mode .”
The SEC has yet to take public action regarding this particular matter, nor has it clarified whether Mr. Musk can simply use other Twitter accounts to evade the terms of his settlement.
False Statements by Proxies for Tesla, Inc. and Mr. Musk
The remarks of two outside individuals with close connections to Mr. Musk have been notable for their content, which has often suggested that they speak on behalf of Tesla, Inc. and/or Elon Musk himself. Ross Gerber of Gerber Kawasaki Investments and Cathie Wood of ARK Capital have each presented themselves to the public as objective observers of Tesla’s progress, with an unflagging optimistic spin. Mr. Gerber, who often appears not to know the basics of the financial industry he purports to work in, has been a Tesla cheerleader for years, despite admitting on video that he owns relatively few shares in the company. On April 18, 2019, he repeated one of Mr. Musk’s talking points, writing “Actually zero depreciation in teslas. They are gaining value.” Ms. Wood has set a now-famous $4,000.00 price target for TSLA common shares on the basis of amorphous graphs that lack any labels on their axes.
On the opposite end of the media spectrum, countless anonymous social media accounts appear to spew pro-Tesla messages at an astonishing rate, sometimes in coordinated fashion. One of these accounts, @Tesla_Truth, is operated by an individual named Omar Qazi who is a general fan of the company’s products. Going by “Steve Jobs” on Twitter, Mr. Qazi has repeatedly harassed critics of the company in aggressive fashion. On his personal Twitter account, @OmarQazi, Mr. Qazi revealed that he had been invited to the Tesla Model Y launch, an exclusive event. Similar questions abound regarding a former swim coach from New Jersey named Paul J. Hornak, whose pro-Tesla posts through his @PJHORNAK account have been mirrored by what appear to be fake accounts., It is notable that Tesla has not enforced its trademark rights against the third-party holders of the @Tesla_Truth and @TeslaOpinion Twitter accounts, despite clear infringement.
Optimism is not illegal. But the distribution of material non-public information to select individuals tasked with pumping up a stock price is. So is compensating individuals to unlawfully harass others on social media (often an interstate medium of communication). Mr. Gerber, Ms. Wood and Mr. Qazi have enjoyed perks such as exclusive factory tours, access to Mr. Musk for podcast interviews, and event invitations, possibly in exchange for their rosy outlook and/or on-line bullying. The arrangement between Mr. Musk, Tesla, and his enablers should be investigated.
Deliberate Lack of Disclosure
Just as troubling as the false statements that Mr. Musk and Tesla have told investors are the curious omissions in its numerous required disclosure documents that pertain to areas key to the company’s success.
Ownership of the Curaçao-Based Musk Private Foundation
In addition to the Musk Foundation, a U.S.-based 501(c)(3) non-profit organization, Elon Musk may control an offshore “non-profit” organization called the Musk Private Foundation, domiciled in Curaçao with Registration Number 139538. E-mail messages to Mr. Musk inquiring about his ownership of the Musk Private Foundation have gone unanswered. Messages to TMF Curaçao NV, the nominee director and wealth management firm that manages the entity, have also gone unanswered.
The Musk Private Foundation’s charter explicitly allows the entity to trade stocks and options, which makes its role insofar as Tesla common stock is concerned potentially important. Mr. Musk is a major shareholder of Tesla, Inc. stock, and as its CEO he is subject to United States securities laws and regulations. The SEC should investigate the role of the Musk Private Foundation in the trading of Tesla stock and/or options, if any.
Cash Balances
Tesla has repeatedly made crucial disclosures regarding its cash balance without specifying how much of that cash had already been allocated to overseas operations in China, where the company is engaged in the construction of a new capital-intensive factory. Corporate filings from Singapore would seem to suggest that at least $500 million has been allocated to China thus far. The SEC has failed to require Tesla to provide any clarity at all on its Chinese operations, even as they appear to grow ever more important for the company’s continued viability.
The SEC has allowed for further confusion over Tesla’s cash position by allowing all companies (not just Tesla) to report their cash position at the end of the quarter, as opposed to providing the average balance during the quarter. Both pieces of information are crucial for investors to be able to make informed decisions.
Consumer Deposits
According to Ashlee Vance’s biography of Mr. Musk, “Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future,” Tesla has reportedly used prospective customer deposits on future product orders to fund its operations. Deposited funds do not belong to Tesla and are merely held in trust. Tesla has failed to disclose how it uses customer deposits and why it has hundreds of millions of dollars in deposits when most of its product line has already been released. As mentioned previously, there have been frequent reports, including but not limited to complaints filed with state Attorneys General, of deposits not being refunded promptly or at all to customers who requested refunds.
The misuse of funds in trust would constitute a serious breach of fiduciary duty and business ethics and would surely violate state and federal law. The amount of customer deposits disclosed in Tesla’s SEC Form 10-K has at times exceeded $800 million. It is therefore alarming that the SEC has failed to investigate Tesla’s use and/or misuse of customer deposits.
Inventory Lots
Critics of Tesla on social media have identified countless parking lots where thousands of Tesla vehicles in aggregate are being stored. Tesla has been completely opaque with regard to the existence of these lots and the risks they involve. Many are outdoors, where unsold cars are likely to both discharge their batteries and depreciate in value faster due to exposure to the elements. Inventory lots also represent an additional expense for the company that investors should be aware of.
The SEC thus far has not pressed Tesla to disclose anything publicly about these lots.
Model 3 and Model Y Reservation Numbers
For a time, Mr. Musk was pleased to boast about the number of reservations for the Model 3. By April 24, 2019, on the Q1 2019 Tesla earnings call, his attitude had completely shifted and he stopped disclosing anything about reservations, claiming that they no longer mattered. In Mr. Musk’s words,
“I think we don’t want to comment on the granularity of deposits. Again, people read too much into this. We’re not playing of the Model Y because we’re just not in production so you can’t really read anything into Model Y orders at this point.”
This spontaneous lack of disclosure is unacceptable in light of the fact that Tesla previously led investors to believe that deposit/reservation information was material.
It is unclear why the SEC has not launched an inquiry into Tesla’s shifting metrics.
“Twitter Sitter” Identity
When crafting its settlement agreement with Mr. Musk in the two aforementioned civil actions, the SEC appears to have gone to great lengths to center its corrective action around the idea of pre-approval. Specifically, Mr. Musk was supposed to pre-approve any public communications on Twitter that could potentially contain material information. What the SEC did not specify, and which later led to considerable problems (including but not limited to a motion to hold Mr. Musk in contempt of court as he was not abiding by the settlement’s terms at all), was who exactly was supposed to pre-approve Mr. Musk’s communications. Mr. Musk interpreted his settlement agreement to mean that he could “pre-approve” his own messages so long as they were within Tesla corporate policy, while the SEC expected a “experienced securities attorney” to fill that role.
The SEC never specified exactly who the so-called “Twitter Sitter” would be. Even in court filings concerning this issue, the specific identity of the “experienced securities attorney” was never disclosed.
If the SEC’s true goal is to hold Mr. Musk accountable, it is clearly necessary to specify who exactly is part of that chain of accountability. As the SEC’s agreement with Mr. Musk currently stands, only an anonymous lawyer can be held accountable. From the public’s perspective, there is no guarantee that such a lawyer even exists, or that if he or she does, that person could be brought before a judge to explain the actions on any given day.
The Office of the Inspector General should demand an explanation from the SEC as to why the identity of this individual, key to proper civil law enforcement, remains a mystery.
Fire Risk
Worldwide, a number of Tesla vehicles have spontaneously caught fire, including numerous cases in the United States. In the United Kingdom, an entire Tesla dealership ignited. This is both a clear safety hazard and a risk to investors that demands immediate investigation by numerous agencies.
Whistleblower Retaliation
While the SEC is a civil enforcement agency and does not have the authority to prosecute criminal violations, some of the issues that Tesla whistleblowers have raised would have had a material impact on Tesla shares had their disclosures been properly made by the company. The fact that Tesla has a documented history of retaliating against whistleblowers is therefore significant from a securities law perspective, as well as a criminal law enforcement perspective.
Tesla Invents a False Threat of Gun Violence in Possible Violation of 18 U.S.C. § 1513
In a detailed March 13, 2019 Bloomberg article entitled, “When Elon Musk Tried to Destroy a Tesla Whistleblower,” the article’s authors describe how Tesla falsified a threat of gun violence by former employee Martin Tripp in order to discredit him. This occurred after Mr. Tripp attempted to blow the whistle on potentially unsafe practices at Tesla. Tesla also sued Mr. Tripp; the case is ongoing.
Tesla Allegedly Calls Child Protective Services on a Recently Fired Nurse
Reveal source Anna Watson was previously employed by Provider Healthcare, LLC as a contractor for Access Omnicare, which in turn was and is a contractor for Tesla. Ms. Watson worked as a Physician’s Assistant at the Tesla Fremont factory, until she was terminated in retaliation for disagreeing with the treatment plan for a patient who reported to the Tesla Medical Center, which she felt was inappropriate. Not long after she was fired, Child Protective Services responded to an anonymous complaint falsely alleging that she was a drug addict who was endangering her children.
Elon Musk Threatens a Recently Fired Employee in the Tesla Parking Lot
On April 5, 2019, Bloomberg reported that Mr. Musk had allegedly pushed an employee in the Tesla parking lot, causing the Tesla Board of Directors to open an “investigation.” The Board found no evidence of wrongdoing. The allegations were nonetheless supported by several eye witnesses.
Tesla Obtains a Temporary Restraining Against on a Citizen Journalist
On April 19, 2019, Tesla obtained a temporary restraining order against Randeep Hothi, one of its critics, who used Twitter to share his concerns about the company’s false and misleading statements. Mr. Hothi had used his observations of Tesla’s factory conditions and vehicles to make relatively accurate predictions about the company’s future plans on a number of occasions. Tesla painted Mr. Hothi, a Ph.D. student, as someone who had attempted to physically harm its employees, without providing any direct evidence. The case is ongoing, though Mr. Hothi has denied Tesla’s allegations and there are no known police reports that would support them.
Conclusion
The formal title of the Securities Exchange Act of 1934 is, “An act [t]o provide for the regulation of securities exchanges and of over-the-counter markets operating in interstate and foreign commerce and through the mails, to prevent inequitable and unfair practices on such exchanges and markets, and for other purposes.”
As this letter demonstrates, the SEC is failing to live up to its congressional mandate. That any citizen could craft a letter of this length listing concern after documented concern about any single publicly traded company, no matter the industry, name, nature of its chief executive, or market capitalization, suggests a complete regulatory failure. And the concerns listed here are merely a sample.
Tesla and Mr. Musk have literally and figuratively made a mockery of the the SEC, before and after it took both parties to court., Especially given that the SEC San Francisco Office Regional Director position has been vacant for months, the need for a formal investigation of the SEC’s handling of Tesla is both obvious and urgent. While the SEC may have already internally investigated some of the the issues raised by this letter, the lack of any follow-up action is disturbing and has already had detrimental effects on capital markets.
Sincerely,
[Your Name Here]
CC: The Honorable Alison J. Nathan, United States District Court for the Southern District of New York
Mr. Nicklas Akers, Office of California Attorney General Xavier Becerra
Mr. Robert Rees, United States Department of Justice
Mr. Steven Buchholz, Securities and Exchange Commission
Ms. Erin Schneider, Securities and Exchange Commission
Ms. Cheryl Crumpton, Securities and Exchange Commission
Mr. Samuel Levine, Office of Federal Trade Commissioner Rohit Chopra
Ms. Erie Meyer, Office of Federal Trade Commissioner Rohit Chopra
Mr. Dan Bernal, Office of House Speaker Nancy Pelosi
Ms. Rohini Kosoglu, Office of Senator Kamala Harris (D-CA)
Mr. David Grannis, Office of Senator Dianne Feinstein (D-CA)
[Your Name]
[Your Address]
[Your Phone Number]
Fax: [Optional, Your Fax]
E-Mail: [Your E-Mail]
E-Mail Instructions: Download, modify, sign, and send this letter to the following individuals. A PDF is probably the best way to send it. If you don’t want to scan your signature, you can sign with a digital signature like this:
/s/Your Name
Just put the /s/ in front.
To: [email protected]
CC: [email protected],
Nicklas Akers <[email protected]>,
Robert Rees <[email protected]>,
Stephen Buchholz <[email protected]>,
Erin Schneider <[email protected]>,
Cheryl Crumpton <[email protected]>,
Samuel Levine <[email protected]>,
Erie Meyer <[email protected]>,
Dan Bernal <[email protected]> (or your representative in Congress),
Rohini Kosoglu <[email protected]> (or your Senator’s chief of staff),
David Grannis <[email protected]> (or your Senator’s chief of staff)
Also feel free to e-mail [email protected] to show that you sent it!
May 13, 2019
Via Electronic Mail
The Honorable Carl W. Hoecker
Inspector General
Securities and Exchange Commission
Washington, D.C. 20551
RE: Request for Investigation into SEC’s Handling of Matters Concerning Tesla, Inc. and Elon Musk
Dear Mr. Hoecker:
I write to request an investigation of the SEC’s handling of numerous matters pertaining to Tesla, Inc. (NASDAQ: TSLA, hereinafter “Tesla”) and its CEO, Elon Musk. Tesla has been one of the most popular and controversial investments for retail investors in recent years. However, investors are unable to make informed decisions about the company or its prospects in the face of a growing number of misleading and conflicting statements, many of them outright lies, by Mr. Musk, which have become so audaciously bold as to demand immediate regulatory intervention. Yet, with narrow exceptions, the SEC has been silent.
Thus far, the SEC has intervened publicly on account of only one of Mr. Musk’s lies: that he would be taking the company private at $420.00 per share, and that he had “funding secured” to do so. This false post on Twitter, visible to Mr. Musk’s tens of millions of followers, resulted in two civil actions: one against Mr. Musk (New York Southern District Court, Case No. 1:18-cv-08865-AJN) and one Tesla, Inc. (New York Southern District Court, Case No. 1:18-cv-08947-AJN). Unfortunately, these actions barely scratched the surface of the unlawful acts perpetrated by the company and its chief executive. This letter should serve as a reference for the outstanding issues the SEC has yet to resolve.
For each issue raised herein, the Officer of the Inspector General should investigate why the SEC decided not to take action, or why action has been delayed. In previous cases with far less obvious violations of securities law, the SEC has intervened. Here, numerous investors have already been harmed. Furthermore, and most importantly, drivers of Tesla vehicles have lost their lives because of the falsehoods Mr. Musk has been permitted to widely disseminate unchecked, and especially those about the ability of Tesla vehicles to drive themselves.
It should further be noted that due to the intense public interest surrounding Tesla, if the SEC fails to take any further action, the corroding effect on the public’s trust in capital markets could be severe. As of the date of this letter, Tesla is a financially unsound company with a market capitalization hovering around $45 billion. If the company fails, it is a foregone conclusion that many tens of thousands of jobs will be lost. Morgan Stanley analyst Adam Jonas says that Tesla’s $2.7 billion in fresh capital is only “a 12-month bridge.”
Regulation requires a long-term outlook. The SEC should view its job as protecting the integrity of U.S. public markets, as well as minimizing shareholder losses that might result from avoidable illegal practices, while avoiding the moral hazard that “safety and soundness” practices necessarily create. The SEC’s job is not protecting shareholders from losses by turning a blind eye to illegal practices designed to artificially inflate a company’s stock price in the short term. Nor does the SEC exist to protect companies themselves or their executives who are on a “hunt for profit,” as suggested by Commissioner Hester Peirce.
Nearly twenty years ago, the failure of Enron was a definining moment for the SEC that highlighted its colossal failures. If nothing is done, I am of the opinion that Tesla’s failure may ultimately prove to be similarly devastating for the public’s trust in the SEC.
Indicia of Accounting Fraud
On November 8, 2018, Tesla employee Salil Parulekar was indicted for wire fraud in the Northern District of California due to his work in Tesla’s accounting department. Weak internal controls at Tesla allowed Mr. Parulekar to intentionally redirect millions of dollars to the wrong vendor.
Only two months before, Tesla’s Chief Accounting Officer, Dave Morton, resigned after only one month on the job. Tesla Chief Financial Officer Deepak Ahuja resigned not long after with a surprise announcement at the very end of the company’s January 30, 2019 Q4 2018 earnings call.
With this background, it is important to note that analysis of the tables provided in Tesla’s Form 10-Q and 10-K filings from Q1 2016 through Q1 2019 in the “Note 5 – Inventory” section (page 18 in the most recent Form 10-Q) suggest evidence of accounting fraud. In both Q3 2017 and Q1 2019, Tesla reported a “Work in process” line item of exactly $277,175 (numbers in thousands). This exact number also happens to be the median for all “Work in process” values from Q1 2016 through Q1 2019. Either this is a stunning coincidence, Tesla’s reported numbers are somehow incorrect in a manner that might be explained by a repeated spreadsheet error, or accounting fraud is taking place.
The SEC has a clear and immediate obligation to investigate.
False Statements by Elon Musk
The SEC has a duty to ensure that regulated earnings calls and investor communications generally contain accurate information to the maximum extent possible. This has not happened in the case of Tesla.
October 24, 2018 Q3 2018 Tesla, Inc. Earnings Call
During the regulated earnings call on October 24, 2018, Mr. Musk claimed, “This quarter, we started rolling out Version 9.0 of our software which is the biggest software upgrade in three years. And Model 3 received a 5-Star safety rating in every category and subcategory. And it got less probability of injury of any car that the U.S. government has ever tested.” In fact, according to what NHTSA told Reuters, “NHTSA does not distinguish safety performance beyond the star rating with five stars being the highest safety rating a vehicle can achieve. Thus, there is no NHTSA ‘safest’ ranking within the five-star category.”
Mr. Musk and Laurie Shelby, Tesla Vice President, EHS, also made statements on the call regarding the manner in which Tesla provides healthcare for employees who work at its Fremont, California factory:
“...We’ve also just opened a new and improved health clinic, so when injuries do occur we get the absolute best care for our associates. And it’s actually overseen by one of California's leading orthopedic surgeons. And we did that, because most of our injuries, like we said like 80%, 85% are those sprains and strains. So now they get that best care here on site. And we have 24/7 care. We are actually staffed by three full-time doctors and nurses. And I am really super happy with the care they’re giving, and I think the employees are as well.”
Not mentioned by Ms. Shelby was that one of the doctors hired by Tesla’s contractor, Access Omnicare (a DBA name for a hand surgeon named Dr. Basil Besh), Dr. Muhannad Hafi, was facing revocation of his medical license at the time he was hired. His license was formally revoked by the California State Medical Board on December 21, 2018 for having sexually assaulted numerous prior patients. Another doctor whose name appears on Access Omnicare medical records provided to investigative journalism outlet Reveal worked for Access Omnicare for all of one week.
Mr. Musk’s statement that Tesla’s medical care was “the absolute best” could therefore not possibly be true, as no objective observer would consider an unlicensed sex offender and an absent physician to be “the absolute best” health care providers available. Mr. Musk went on to refer to Access Omnicare as “a really immediate first-class healthcare available right on the spot, when people need it. And this not just for workplace, this for workplace and non-workplace.” Reveal’s reporting suggests that this too was a lie. In fact, Tesla was sending employees to the hospital in Lyft vehicles to avoid having to report injury statistics or pay for ambulance trips. Nonetheless, Ms. Shelby described Tesla’s care practices as “super exciting” on the call.
Mr. Musk went even further, stating, “if you like become injured right off for any reason then there is healthcare immediately on site.” In fact, Tesla’s on-site medical facilities were and are quite limited, requiring frequent transportation to actual health care facilities.
Investors listening to these false statements might have been reassured that Tesla had its workplace injury program under control. In reality, it was fined by CalOSHA numerous times for violations, and its practices have led to no fewer than 47 employment related lawsuits according to PlainSite.
January 30, 2019 Q4 2018 Tesla, Inc. Earnings Call
By January 30, 2019, Mr. Musk knew or should have known that the pace of Model 3 sales were drastically slower in January than they had been during Q4 2018. On December 31, 2018, a federal tax incentive for electric vehicle purchases expired, eliminating a significant incentive for potential customers to purchase Tesla vehicles. Despite the knowledge that sales had slowed markedly, Mr. Musk still assured investors on the earnings call that future demand looked strong. On the call, with 30 days of sales data at his disposal, he nonetheless stated, “I’m optimistic about being profitable in Q1 and all quarters going forward.”
Three months later, Tesla announced a $702 million loss, which would have approached $1 billion had the company not factored in one-time sales of emissions credits—a far cry from profitability.
The SEC has not signaled that it has any concerns about Mr. Musk’s deliberately false and misleading January 30, 2019 statement, which undoubtedly had a positive effect on the company’s stock price.
April 24, 2019 Q1 2019 Tesla, Inc. Earnings Call
On Tesla’s Q1 2019 earnings call, Mr. Musk declared, “We expect to return to profitability in Q3 and significantly reduce our loss in Q2,” once again reversing his previous prediction of a profit made only weeks prior (see “February 28, 2019 ‘Media Call’” below). Yet again, Mr. Musk likely knew this statement to be false at the time he made it, but sought to increase Tesla’s declining stock price.
Mr. Musk also made the compound false statement, “All Tesla class vehicles today have all the hardware necessary for full self-driving and over-the-air updates will enable our customers to use the Tesla ride-hailing network fleet and generate income, which as we said on Autonomy Day a few days ago we think is somewhere between $10,000 and $30,000 a year, in some cases, perhaps more.” Multiple experts agree that Mr. Musk is wrong about his claim that Tesla vehicles are capable of “full self-driving,” to the point where Consumer Reports issued a press release disputing this claim due to the immediate safety risk it poses to drivers. Mr. Musk’s claim about a “Tesla ride-hailing network” was similarly based on no actual evidence.
Mr. Musk did not stop there. He also made the outrageous claim that, “…in 2020, we expect to have a million robo-taxis on the road with the hardware necessary for full self-driving.” This will be nearly impossible to achieve, since Tesla vehicles do not have the hardware necessary for full self-driving.
It is puzzling that the SEC has not signaled any issue with any of these false claims.
Restricted Access Conference Calls in Violation of Regulation FD
Tesla has now held several conference calls for the purpose of distributing information material to shareholders that has not been made available to the public as required by Regulation FD, 17 C.F.R. § 243. The regulatory violations here, as elsewhere, have been brazen.
February 28, 2019 “Media Call”
Immediately following the SEC’s February 25, 2019 motion to hold Mr. Musk in contempt of court, Mr. Musk posted a series of tweets on February 26th designed to intentionally mislead shareholders into believing that there was some potentially positive new announcement coming at 5:00 P.M. EDT on February 28, 2019. In his words, across three separate posts, “Thursday 2pm / California / Some Tesla news.”
Tesla shares rose approximately 7% over the next two trading days. At 5:00 P.M. on the 28th, Mr. Musk led an invite-only conference call for certain reporters. The Los Angeles Times later described the call in the following manner in an article entitled, “Tesla’s Elon Musk, facing contempt charges, says semi-secret meeting was a mistake:”
“During the call, in which a cheaper version of the Model 3 electric sedan was announced, Musk said the company would be closing its retail stores and that it would not, as originally forecast, post a profit for the current quarter. Participants were told not to post recordings of the proceedings, and after the meeting Tesla said a recording or transcript of the meeting would not be made available to the media or the general public.”
Tesla’s initial refusal to make a recording or transcript of the call available is a clear violation of 17 C.F.R. § 243.100(a) (“…the issuer shall make public disclosure of that information as provided in § 243.101(e): (1) Simultaneously, in the case of an intentional disclosure; and (2) Promptly, in the case of a non-intentional disclosure.”) This intentional disclosure was neither simultaneous nor prompt.
Despite widespread publicity about this state of affairs, the SEC took no visible action to follow up. Later, Tesla did post a recording and transcript of the call, but was not reportedly required to pay any sort of penalty. The transcript includes the quote, attributed to Mr. Musk, “We do not expect to be profitable in Q1. But we do think that profitability in Q2 is likely.” This came only a month after Mr. Musk had expressed his optimism about a Q1 profit. Again, by the time of this statement he had enough data about demand for Tesla vehicles to know that a Q2 2019 profit would be nearly impossible. As mentioned previously, he was forced to walk this statement back only a few weeks later.
Mr. Musk also stated, “I’m certain we’ll be feature complete with full self-driving this year.” He knew or should have known that this statement was false.
The SEC should have been aware of the statements on this call well before it argued to hold Mr. Musk in contempt of court. Yet for some reason, these extremely concerning issues were not brought to the attention of Judge Alison Nathan, and the SEC’s settlement agreement with Mr. Musk was ultimately amended in April with no further penalty or admission of wrongdoing from Mr. Musk.
May 2, 2019 Tesla, Inc. Secondary Offering Call
On May 2, 2019, Tesla held a conference call regarding its imminent issuance of common shares via a secondary offering, which also included the issuance of convertible bond notes. This conference call was similarly “secret” in violation of Regulation FD. Based on leaked information, on this call, Mr. Musk made a number of completely outrageous statements:
The projection that Tesla would soon achieve a market capitalization of $500 billion;
That Tesla vehicles “appreciate” in value over time to the tune of $150,000 to $200,000 in three years, despite all evidence indicating the exact opposite (as is the case with any automobile);
Collision repairs “in a matter of hours” despite the fact that reports of missing Tesla spare parts are widespread.
As of the date of this letter, it does not appear that the SEC has forced Tesla to disclose a recording or transcript of the call. Nor has the SEC followed up by requiring Tesla to explain the basis for its statements.
“Autonomy Investor Day”
“Full Self-Driving” (FSD) Terminology
Mr. Musk has falsely referred to Tesla’s driver assistance technology as “full self-driving,” often abbreviated as FSD. Tesla cars equipped with the company’s “AutoPilot” feature cannot, in fact, drive themselves. Nor has Tesla achieved “Level 5” autonomy, despite Mr. Musk’s promises to the contrary. Tesla AutoPilot has caused several accidents, some fatal.
As previously noted, the abuse of language by Tesla and Mr. Musk has been so shocking that consumer watchdog group Consumer Reports issued a press release after Tesla’s April 22, 2019 Autonomy Investor Day entitled, “Consumer Reports: Tesla Must Prove Safety Before Claiming “Self-Driving” Ability.”,
Mr. Musk’s false claims about a technology that has already resulted in the loss of life are alarming, and the SEC’s lack of interest and action in stopping further similar claims is similarly alarming.
“We Just Randomly Threw Some Numbers On There”
During the Autonomy Investor Day, Mr. Musk claimed that Tesla’s new destiny as a robo-taxi company would result in Tesla owners earning money from their cars’ ability to drive themselves. When questioned about how the company reached its conclusions, Mr. Musk responded, “We just randomly threw some numbers on there.”
If Tesla did in fact just use numbers with no basis in fact to mislead investors, this would be a flagrant violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5. The SEC should investigate.
Social Media
Vehicles Appreciate In Value
On April 12, 2019, in an interview broadcast on YouTube with a self-described machine learning expert, Mr. Musk stated, “Buying a car today is an investment into the future. I think the most profound thing is that if you buy a Tesla today, I believe you are buying an appreciating asset—not a depreciating asset.” This statement is part of a pattern of false, misleading, and deceptive communications. Thus far, the SEC has failed to take meaningful action to stop Mr. Musk from making such statements.
Robo-Taxi Fleet Assertions
To distract from Tesla’s impending insolvency, Mr. Musk began tweeting about the far-off possibility of deploying a “fleet” of one million self-driving robo-taxis in 2020 based on existing vehicles already sold to consumers, which could be repurposed on demand to serve as taxis if necessary.
Yet no reference to robo-taxis ultimately appeared in the company’s secondary offering prospectus. Experts at MIT doubt that such a service would be cost effective. As with many of the company’s and/or Mr. Musk’s statements, the true purpose of this communication was to pump up a flagging stock price based on false information. This is another flagrant violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5. The SEC should investigate.
Tesla Brake Pads “Literally Never Need To Be Replaced”
On December 26, 2018, Mr. Musk wrote on Twitter, “Brake pads on a Tesla literally never need to be replaced for lifetime of the car.” This was also part of the aforementioned pattern of false, misleading, and deceptive communications. The SEC should force Tesla to disclose how many brake pads it has replaced in its vehicles according to its ERP systems.
Already Sold Vehicles Have Everything Necessary For Level 5 Self-Driving Capability
On March 24, 2017, Mr. Musk wrote on Twitter, “All Tesla cars built since Oct last year will be capable of self-driving as software improves.” Mr. Musk repeated this claim on April 22, 2019 by stating on Twitter, “All cars made since Oct 2016 either have the hardware needed for FSD or are trivially upgradeable.” These statements are part of the aforementioned pattern of false, misleading, and deceptive communications. Thus far, the SEC has failed to take meaningful action to stop Mr. Musk from making such statements.
Deposit Refund Policy
Mr. Musk has made several different claims on Twitter about Tesla’s refund policy. On January 9, 2019, he wrote, “Btw, you can buy a Tesla online in less than 2 mins & give it back for a full refund for any reason Tesla.com.”
PlainSite has tracked at least 16 lawsuits over Tesla refusing to honor customer deposit refund requests filed by customers or potential customers. It has also uncovered complaints filed with Attorneys General of multiple states, including Ohio, Florida and Texas, regarding deposit refund failures. Mr. Musk’s statement is part of the aforementioned pattern of false, misleading, and deceptive communications. Thus far, the SEC has failed to take meaningful action to stop Mr. Musk from making false statements.
Settlement Negotiations
Several court filings signed by Mr. Musk in Case No. 1:18-cv-08865-AJN, such as Document Nos. 42 and 44, lacked any contact information for Mr. Musk’s counsel or Mr. Musk himself, in clear violation of Federal Rule of Civil Procedure 11(a). Before these documents were filed, Mr. Musk had been represented by counsel, yet there is no mention of Mr. Musk’s counsel in the substance of these status update documents or in the deficient signature blocks. These documents were submitted to the court’s CM/ECF system by the SEC, not by Mr. Musk or his counsel.
This raises a number of questions. Why did the SEC allow Mr. Musk to sign his name to a court document without providing his contact information as required by Rule 11? Was Mr. Musk represented by counsel as he negotiated with the SEC? If so, why was his counsel not on the court mandated conference call(s), according to the SEC’s recounting, and why did counsel not sign the status updates? If not, why did his counsel not follow Civil Local Rule 1.4 and withdraw from the case after obtaining Judge Nathan’s permission? Why did the SEC turn a blind eye to these rule violations?
Perhaps most importantly, if Mr. Musk was not represented by counsel as he negotiated with the SEC, why were investors not made aware of this material fact? Few investors would want to put their money into a multi-billion dollar company where the CEO could be foolish enough to represent himself pro se before a regulatory agency while attempting to avoid a contempt of court charge.
These questions demand answers.
False and Concerning Statements by Tesla, Inc.
Not every false statement has been issued by Mr. Musk himself. Some have come from the company through its employees and spokespeople.
The “Factory Gated” Vehicles
In June 2018, Tesla proclaimed that it had met its self-declared target of producing 5,000 Model 3 vehicles per week by producing vehicles of such inferior quality that reportedly 86% of them had to be re-worked. These vehicles were reported to have been “factory gated,” with no clear definition of what that unusual term actually meant. The issues surrounding Tesla’s Model 3 production abilities are reportedly the subject of an ongoing Department of Justice probe.
“Zero Emissions” License Plates
For years, Tesla vehicles have sported temporary license plates that are actually advertisements stating, “ZERO EMISSIONS.” The notion that Tesla cars can be manufactured and operated without contributing any carbon dioxide or other emissions to the environment is patently false. Electric vehicles simply move the source of emissions from the tailpipe to the electricity producer.
Often, the electricity producer is actually Tesla itself. On March 6, 2019, PlainSite published a photograph of Tesla Model 3 vehicles being charged at Tesla’s Burlingame dealership with two portable MQ Power WhisperWatt DCA300SSJU4F2 diesel generators rented from Hertz Rentals. In fact, Tesla dealerships and inventory lots nationwide routinely use diesel generators, which generate toxic emissions, to re-charge Tesla vehicles in the company’s steadily growing inventory.
Chinese Customs Dispute
On March 5, 2019, the Chinese English-language publication Caixin published an article with the headline “China is currently holding 1,600 Teslas at customs,” setting off a plunge in Tesla’s stock price. This news was picked up by Reuters and syndicated to other financial news websites such as CNBC.
Later on March 5th, Reuters published a second article announcing that the issue in China had been resolved, immediately lifting Tesla’s stock. The article was based on a single source “familiar with the matter,” who convinced Reuters that “China’s customs authorities have accepted electric carmaker Tesla Inc’s plan to remedy problems.” An initial version of the Reuters article suggested that the source was a Tesla employee. In fact, the issue remained unresolved for weeks. On March 14th, Bloomberg published a much more detailed article explaining that China had finally cleared Tesla vehicles to proceed through customs.
If in fact Tesla deliberately provided false and/or misleading information to the press, a material and significant violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5 took place. Yet the SEC does not appear to have taken any steps to investigate.
Corporate Blog
On September 7, 2018, Tesla posted a public update based on an “internal” e-mail message to employees. Referring to Q3 2018, this update claimed that, “We are about to have the most amazing quarter in our history, building and delivering more than twice as many cars as we did last quarter.” This proved to be false: according to Bloomberg, Tesla produced 28,578 Model 3 vehicles in Q2 2018, and 53,239 Model 3 vehicles in Q3 2018. Twice the Q2 2018 production figure would have been 57,156 vehicles, or 7.35% more than were actually produced. The post also made unsubstantiated claims about the electric vehicle battery market share of Tesla’s Nevada-based factory.
Despite the obvious falsehoods, these statements were never publicly challenged or questioned by the SEC.
“Unusually High [Order] Volume”
On March 19, 2019, the official @tesla Twitter account claimed, “Due to unusually high volume, Tesla was unable to process all orders by midnight on Monday, so the slight price rise on vehicles is postponed to midnight Wednesday.” (This post was also re-tweeted by Mr. Musk’s personal @ElonMusk account.) There was no evidence for this suspicious claim at the time, and the company’s Q1 2019 financial report confirmed it to be a two-part lie: Tesla’s servers were fine, and there was no spike in order activity that caused them to experience any problems.
As with many of the company’s and/or Mr. Musk statements, the true purpose of this communication was to pump up a flagging stock price based on false information. This is a flagrant violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5. The SEC should investigate.
“mmm ok”
On May 7, 2019 at 1:00 P.M., the Tesla Twitter account wrote, “The world of autonomous driving is coming whether you want it or not. With a Tesla, you’re ready for it.” A Twitter user responded with, “Ok please don’t kill my family,” and in turn, the Tesla Twitter account replied, “mmm [Double Line Break] ok”.
Aside from the inappropriateness of a major auto manufacturer publicly joking about the prospect of killing someone’s family with one of its products, the Tweet is questionable because it was authored in the cheeky style of Tesla’s CEO, who is forbidden from using Twitter without pre-approval pursuant to his settlement with the SEC. The @tesla account has posted other tweets in this immature style throughout May 2019, strongly suggesting authorship by Mr. Musk without pre-approval. For example, on May 9, 2019, the @tesla account wrote, “Hands up if you've ever blamed your own emissions on Fart Mode .”
The SEC has yet to take public action regarding this particular matter, nor has it clarified whether Mr. Musk can simply use other Twitter accounts to evade the terms of his settlement.
False Statements by Proxies for Tesla, Inc. and Mr. Musk
The remarks of two outside individuals with close connections to Mr. Musk have been notable for their content, which has often suggested that they speak on behalf of Tesla, Inc. and/or Elon Musk himself. Ross Gerber of Gerber Kawasaki Investments and Cathie Wood of ARK Capital have each presented themselves to the public as objective observers of Tesla’s progress, with an unflagging optimistic spin. Mr. Gerber, who often appears not to know the basics of the financial industry he purports to work in, has been a Tesla cheerleader for years, despite admitting on video that he owns relatively few shares in the company. On April 18, 2019, he repeated one of Mr. Musk’s talking points, writing “Actually zero depreciation in teslas. They are gaining value.” Ms. Wood has set a now-famous $4,000.00 price target for TSLA common shares on the basis of amorphous graphs that lack any labels on their axes.
On the opposite end of the media spectrum, countless anonymous social media accounts appear to spew pro-Tesla messages at an astonishing rate, sometimes in coordinated fashion. One of these accounts, @Tesla_Truth, is operated by an individual named Omar Qazi who is a general fan of the company’s products. Going by “Steve Jobs” on Twitter, Mr. Qazi has repeatedly harassed critics of the company in aggressive fashion. On his personal Twitter account, @OmarQazi, Mr. Qazi revealed that he had been invited to the Tesla Model Y launch, an exclusive event. Similar questions abound regarding a former swim coach from New Jersey named Paul J. Hornak, whose pro-Tesla posts through his @PJHORNAK account have been mirrored by what appear to be fake accounts., It is notable that Tesla has not enforced its trademark rights against the third-party holders of the @Tesla_Truth and @TeslaOpinion Twitter accounts, despite clear infringement.
Optimism is not illegal. But the distribution of material non-public information to select individuals tasked with pumping up a stock price is. So is compensating individuals to unlawfully harass others on social media (often an interstate medium of communication). Mr. Gerber, Ms. Wood and Mr. Qazi have enjoyed perks such as exclusive factory tours, access to Mr. Musk for podcast interviews, and event invitations, possibly in exchange for their rosy outlook and/or on-line bullying. The arrangement between Mr. Musk, Tesla, and his enablers should be investigated.
Deliberate Lack of Disclosure
Just as troubling as the false statements that Mr. Musk and Tesla have told investors are the curious omissions in its numerous required disclosure documents that pertain to areas key to the company’s success.
Ownership of the Curaçao-Based Musk Private Foundation
In addition to the Musk Foundation, a U.S.-based 501(c)(3) non-profit organization, Elon Musk may control an offshore “non-profit” organization called the Musk Private Foundation, domiciled in Curaçao with Registration Number 139538. E-mail messages to Mr. Musk inquiring about his ownership of the Musk Private Foundation have gone unanswered. Messages to TMF Curaçao NV, the nominee director and wealth management firm that manages the entity, have also gone unanswered.
The Musk Private Foundation’s charter explicitly allows the entity to trade stocks and options, which makes its role insofar as Tesla common stock is concerned potentially important. Mr. Musk is a major shareholder of Tesla, Inc. stock, and as its CEO he is subject to United States securities laws and regulations. The SEC should investigate the role of the Musk Private Foundation in the trading of Tesla stock and/or options, if any.
Cash Balances
Tesla has repeatedly made crucial disclosures regarding its cash balance without specifying how much of that cash had already been allocated to overseas operations in China, where the company is engaged in the construction of a new capital-intensive factory. Corporate filings from Singapore would seem to suggest that at least $500 million has been allocated to China thus far. The SEC has failed to require Tesla to provide any clarity at all on its Chinese operations, even as they appear to grow ever more important for the company’s continued viability.
The SEC has allowed for further confusion over Tesla’s cash position by allowing all companies (not just Tesla) to report their cash position at the end of the quarter, as opposed to providing the average balance during the quarter. Both pieces of information are crucial for investors to be able to make informed decisions.
Consumer Deposits
According to Ashlee Vance’s biography of Mr. Musk, “Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future,” Tesla has reportedly used prospective customer deposits on future product orders to fund its operations. Deposited funds do not belong to Tesla and are merely held in trust. Tesla has failed to disclose how it uses customer deposits and why it has hundreds of millions of dollars in deposits when most of its product line has already been released. As mentioned previously, there have been frequent reports, including but not limited to complaints filed with state Attorneys General, of deposits not being refunded promptly or at all to customers who requested refunds.
The misuse of funds in trust would constitute a serious breach of fiduciary duty and business ethics and would surely violate state and federal law. The amount of customer deposits disclosed in Tesla’s SEC Form 10-K has at times exceeded $800 million. It is therefore alarming that the SEC has failed to investigate Tesla’s use and/or misuse of customer deposits.
Inventory Lots
Critics of Tesla on social media have identified countless parking lots where thousands of Tesla vehicles in aggregate are being stored. Tesla has been completely opaque with regard to the existence of these lots and the risks they involve. Many are outdoors, where unsold cars are likely to both discharge their batteries and depreciate in value faster due to exposure to the elements. Inventory lots also represent an additional expense for the company that investors should be aware of.
The SEC thus far has not pressed Tesla to disclose anything publicly about these lots.
Model 3 and Model Y Reservation Numbers
For a time, Mr. Musk was pleased to boast about the number of reservations for the Model 3. By April 24, 2019, on the Q1 2019 Tesla earnings call, his attitude had completely shifted and he stopped disclosing anything about reservations, claiming that they no longer mattered. In Mr. Musk’s words,
“I think we don’t want to comment on the granularity of deposits. Again, people read too much into this. We’re not playing of the Model Y because we’re just not in production so you can’t really read anything into Model Y orders at this point.”
This spontaneous lack of disclosure is unacceptable in light of the fact that Tesla previously led investors to believe that deposit/reservation information was material.
It is unclear why the SEC has not launched an inquiry into Tesla’s shifting metrics.
“Twitter Sitter” Identity
When crafting its settlement agreement with Mr. Musk in the two aforementioned civil actions, the SEC appears to have gone to great lengths to center its corrective action around the idea of pre-approval. Specifically, Mr. Musk was supposed to pre-approve any public communications on Twitter that could potentially contain material information. What the SEC did not specify, and which later led to considerable problems (including but not limited to a motion to hold Mr. Musk in contempt of court as he was not abiding by the settlement’s terms at all), was who exactly was supposed to pre-approve Mr. Musk’s communications. Mr. Musk interpreted his settlement agreement to mean that he could “pre-approve” his own messages so long as they were within Tesla corporate policy, while the SEC expected a “experienced securities attorney” to fill that role.
The SEC never specified exactly who the so-called “Twitter Sitter” would be. Even in court filings concerning this issue, the specific identity of the “experienced securities attorney” was never disclosed.
If the SEC’s true goal is to hold Mr. Musk accountable, it is clearly necessary to specify who exactly is part of that chain of accountability. As the SEC’s agreement with Mr. Musk currently stands, only an anonymous lawyer can be held accountable. From the public’s perspective, there is no guarantee that such a lawyer even exists, or that if he or she does, that person could be brought before a judge to explain the actions on any given day.
The Office of the Inspector General should demand an explanation from the SEC as to why the identity of this individual, key to proper civil law enforcement, remains a mystery.
Fire Risk
Worldwide, a number of Tesla vehicles have spontaneously caught fire, including numerous cases in the United States. In the United Kingdom, an entire Tesla dealership ignited. This is both a clear safety hazard and a risk to investors that demands immediate investigation by numerous agencies.
Whistleblower Retaliation
While the SEC is a civil enforcement agency and does not have the authority to prosecute criminal violations, some of the issues that Tesla whistleblowers have raised would have had a material impact on Tesla shares had their disclosures been properly made by the company. The fact that Tesla has a documented history of retaliating against whistleblowers is therefore significant from a securities law perspective, as well as a criminal law enforcement perspective.
Tesla Invents a False Threat of Gun Violence in Possible Violation of 18 U.S.C. § 1513
In a detailed March 13, 2019 Bloomberg article entitled, “When Elon Musk Tried to Destroy a Tesla Whistleblower,” the article’s authors describe how Tesla falsified a threat of gun violence by former employee Martin Tripp in order to discredit him. This occurred after Mr. Tripp attempted to blow the whistle on potentially unsafe practices at Tesla. Tesla also sued Mr. Tripp; the case is ongoing.
Tesla Allegedly Calls Child Protective Services on a Recently Fired Nurse
Reveal source Anna Watson was previously employed by Provider Healthcare, LLC as a contractor for Access Omnicare, which in turn was and is a contractor for Tesla. Ms. Watson worked as a Physician’s Assistant at the Tesla Fremont factory, until she was terminated in retaliation for disagreeing with the treatment plan for a patient who reported to the Tesla Medical Center, which she felt was inappropriate. Not long after she was fired, Child Protective Services responded to an anonymous complaint falsely alleging that she was a drug addict who was endangering her children.
Elon Musk Threatens a Recently Fired Employee in the Tesla Parking Lot
On April 5, 2019, Bloomberg reported that Mr. Musk had allegedly pushed an employee in the Tesla parking lot, causing the Tesla Board of Directors to open an “investigation.” The Board found no evidence of wrongdoing. The allegations were nonetheless supported by several eye witnesses.
Tesla Obtains a Temporary Restraining Against on a Citizen Journalist
On April 19, 2019, Tesla obtained a temporary restraining order against Randeep Hothi, one of its critics, who used Twitter to share his concerns about the company’s false and misleading statements. Mr. Hothi had used his observations of Tesla’s factory conditions and vehicles to make relatively accurate predictions about the company’s future plans on a number of occasions. Tesla painted Mr. Hothi, a Ph.D. student, as someone who had attempted to physically harm its employees, without providing any direct evidence. The case is ongoing, though Mr. Hothi has denied Tesla’s allegations and there are no known police reports that would support them.
Conclusion
The formal title of the Securities Exchange Act of 1934 is, “An act [t]o provide for the regulation of securities exchanges and of over-the-counter markets operating in interstate and foreign commerce and through the mails, to prevent inequitable and unfair practices on such exchanges and markets, and for other purposes.”
As this letter demonstrates, the SEC is failing to live up to its congressional mandate. That any citizen could craft a letter of this length listing concern after documented concern about any single publicly traded company, no matter the industry, name, nature of its chief executive, or market capitalization, suggests a complete regulatory failure. And the concerns listed here are merely a sample.
Tesla and Mr. Musk have literally and figuratively made a mockery of the the SEC, before and after it took both parties to court., Especially given that the SEC San Francisco Office Regional Director position has been vacant for months, the need for a formal investigation of the SEC’s handling of Tesla is both obvious and urgent. While the SEC may have already internally investigated some of the the issues raised by this letter, the lack of any follow-up action is disturbing and has already had detrimental effects on capital markets.
Sincerely,
[Your Name Here]
CC: The Honorable Alison J. Nathan, United States District Court for the Southern District of New York
Mr. Nicklas Akers, Office of California Attorney General Xavier Becerra
Mr. Robert Rees, United States Department of Justice
Mr. Steven Buchholz, Securities and Exchange Commission
Ms. Erin Schneider, Securities and Exchange Commission
Ms. Cheryl Crumpton, Securities and Exchange Commission
Mr. Samuel Levine, Office of Federal Trade Commissioner Rohit Chopra
Ms. Erie Meyer, Office of Federal Trade Commissioner Rohit Chopra
Mr. Dan Bernal, Office of House Speaker Nancy Pelosi
Ms. Rohini Kosoglu, Office of Senator Kamala Harris (D-CA)
Mr. David Grannis, Office of Senator Dianne Feinstein (D-CA)
Makes we want to crowd source a complaint letter to SEC re attempted market manipulation by shorts.
larmor
Active Member
That's ok, the market has told us that Tesla's FSD computer has no value.
Causalien
Prime 8 ball Oracle
Imo, this part should be moved to korea or taiwan. Both countries have pretty well established high tech industry (and cheapblabour) as well as majority of chip fabrication capacities. Not sure why Tesla went to China for this.
They’re all #1!!
In all seriousness, reading through some of this, they really should have pared down their list. At least the first several all acknowledge there was no falsehood given or claim ridiculous “falsehoods” like Tesla’s on-site healthcare being good.
EDIT:
Read a little more for entertainment value and wasn't disappointed:
Comedy. Gold.
EVNow
Well-Known Member
Atleast have another vendor in Taiwan/Korea make half the volume. Then, they can switch the volume based on tariffs.
ps : BTW, if the price was already some 10% more in Taiwan/Korea and if more manufacturers start switching making the price further up - Tesla won't save much by switching. In general this is the reason most manufacturers don't switch suppliers. It takes a lot of time and may not save much money in the end.
Sadly I agree on a couple of their complaints. (The private conference calls where they don't even release the recording immediately afterwards, when it should have never been private to begin with.)
EVNow
Well-Known Member
But the shorts don't actually want Tesla to correct the issues - they just want SEC to start some kind of investigation to push SP down. Purely for greed and nothing else.
The buy meme is at 220. “Hold” in this case wasn’t meant as “Don’t sell”, but rather as “Don’t buy just yet, wait for it to come closer/lower!”
I like to think of the current price action as the perfect bear trap! Mwahaha… haha… ha…
Talk about commenting without bothering to know the context.
I was responding to someone who said CR rated it as the best as if CR did some comparative testing per their usual reports.
I don’t have anything against JDP, but they are fairly biased surveys. Many of them are “sponsored” by dealers as an incentive like with free tank of gas or services.
Carl Raymond
Active Member
If I were in China, my excitement over GF3 would overtrump any misgivings of US products in general. Try living in Australia, still locked in the coal era, with no hope of any GF on any horizon.
Fixed costs swamped by revenue. All they have to do is keep growing. Pretty much inevitable.
Artful Dodger
"Neko no me"
S/X have a split line. It's common at the beginning for the shared chassis/pack/drive components, then splits into two for body assembly. So S/X is GA 1/2.
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