Tesla refutes report of deepening criminal investigation

Tesla on Friday responded to a report that it is the subject of a deepening US criminal investigation, saying it has not received any subpoena from the Department of Justice.

The electric carmaker said it had received a voluntary request for documents from the justice department earlier this year regarding production guidance for its mass market Model 3 sedans and the company was co-operative in responding to it.

“We have not received a subpoena, a request for testimony, or any other formal process, and there have been no additional document requests about this from the Department of Justice for months,” Tesla said in a statement.

Tesla’s statement comes after the Wall Street Journal reported on Friday that authorities are looking at whether the carmaker has knowingly misled investors with its Model 3 production goals.

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The Journal, citing people familiar with the matter, said FBI agents have contacted former Tesla employees in recent weeks asking them for testimony in the criminal case. These employees have also received subpoenas related to the probe, the paper reported.

Repeated production bottlenecks have hit the Model 3 since its launch more than a year ago, putting Mr Musk under intense pressure and forcing him to push back his targets by six months.

The company finally reached its weekly production goal at the end of June and has since been able to hit a quarterly target, although its production levels are still only half what Mr Musk originally promised to reach by the end of 2018.

Tesla maintained on Friday that it had been “transparent” over how difficult ramping up Model 3 production would be.

Six months longer

“Ultimately, given difficulties that we did not foresee in this first-of-its-kind production ramp, it took us six months longer than we expected to meet our 5,000 unit per week guidance,” it said.

“Tesla’s philosophy has always been to set truthful targets - not sandbagged targets that we would definitely exceed and not unrealistic targets that we could never meet. While Tesla gets criticised when it is delayed in reaching a goal, it should not be forgotten that Tesla has achieved many goals that were doubted by most. We are enormously proud of the efforts of the whole company in making it through this difficult ramp and getting us to volume production.”

Shares in Tesla have been punished this year by production concerns and by the fallout from founder Elon Musk’s claim that he had secured the funding to take the company private.

But the stock has regained its footing after Mr Musk last month settled fraud charges with the Securities and Exchange Commission over his alleged "false and misleading" claims about a possible Tesla buyout.

A surprise return to profitability this week has further helped boost Tesla’s share price. The stock is up 1.5 per cent on Friday after having given up the bulk of its morning gains in the wake of the WSJ report. The advance takes the stock’s gains since its recent low on October 8th to over 20 per cent, and leaves it 4 per cent higher year-to-date. – Copyright The Financial Times Limited 2018