We suspected this would happen and it ultimately did.
Last week we learned that the Securities and Exchange Commission, or as Elon Musk likes to call the ‘Shortseller Enrichment Commission’, was investigating Tesla over its claimed Model 3 production numbers. Basically, there was a suspicion the EV automaker and its always vocal CEO was not being truthful regarding Model 3 production claims beginning in 2017.
More specifically, the US government is interested in whether or not Musk’s claim of producing 5,000 Model 3s per month by December of last year constitutes fraud. Why? Because Model 3 production was not even happening yet when Musk made his claim. That 5,000-unit monthly figure was not achieved until June 2018. Because of this, the SEC last Friday issued subpoenas, according to Reuters.
The agency issued those subpoenas over “certain projections that we made for Model 3 production rates during 2017 and other public statements relating to Model 3 production.” The SEC also issued subpoenas regarding Musk’s now infamous tweet about taking Tesla private. The SEC and US Department of Justice want to find out whether or not Tesla, meaning Musk, misled investors regarding its business operations. A former SEC investigator told Reuters the agency is wants to know whether Tesla’s Model 3 production projections were “based on fact or not.” And just when many thought the worst was behind Tesla, given that Model 3 production seems to have stabilized and Musk will step down as chairman as part of another SEC settlement, more trouble could lie ahead.
Tesla may also be facing a shareholder class action suit claiming Musk and other company executives made false statements about whether the Model 3 was ready for production. These SEC subpoenas will now force Tesla to hand over certain documents that could determine whether that shareholder suit is filed or not. And, not to mention, potentially more trouble with the SEC and Department of Justice.