DOJ Ramps Up Investigations Into Elon Musk’s Tesla
(Photo by Nathan Howard/Getty Images)
President Joe Biden’s Department of Justice (DOJ) has issued subpoenas for billionaire Elon Musk’s electric car company Tesla, according to the company’s Securities and Exchange Commission (SEC) filing on Monday.
The subpoenas relate to investigations into Tesla’s autonomous driving features and alleged personal benefits distributed to Musk, among other allegations, according to the SEC filing. Musk and his companies have faced numerous investigations from the Biden administration since he took over the social media platform Twitter — now called X — in October 2022. (RELATED: From Insider Trading To Racism Allegations, Elon Musk And His Companies Face A Mountain Of Legal Challenges)
Tesla Full Self-Driving capability demo in Austin
FSD capability features use vision neural networks to perceive & understand the world, just like humans do.
Via our unique fleet learning approach, we are able to collect anonymized data from our vehicles—meaning the neural… pic.twitter.com/CWAS5h0jGH
— Tesla (@Tesla) October 17, 2023
“The Company has received requests for information, including subpoenas, from the DOJ,” the filing states. “These have included requests for documents related to Tesla’s Autopilot and [Full Self-Driving] features. Additionally, the Company has received requests for information, including subpoenas from the DOJ, regarding certain matters associated with personal benefits, related parties, vehicle range and personnel decisions.”
The personal benefits subpoena could refer to a DOJ investigation into Tesla’s alleged allocation of funds toward a secret project rumored to be a glass house for Musk. The project is reportedly called “Project 42,” and involves the construction of an expansive glass building in the vicinity of Austin, Texas. “I’m not building a house of any kind, let alone a glass one!” Musk posted on X in August.
“To our knowledge no government agency in any ongoing investigation has concluded that any wrongdoing occurred,” Tesla’s SEC filing continues. “We cannot predict the outcome or impact of any ongoing matters. Should the government decide to pursue an enforcement action, there exists the possibility of a material adverse impact on our business, results of operation, prospects, cash flows, financial position or brand.”
Musk suggested the Biden administration or at least “aspects” of it could be coming after him for political reasons on the All-In Podcast in September. He also acknowledged that prosecutions against him likely have escalated to an extent since he purchased X and made it a freer platform.
Tesla also faces a lawsuit from the Equal Employment Opportunity Commission over alleged racism, according to an announcement by the federal agency in September. Black personnel allegedly experienced numerous instances of racist abuse and derogatory slurs at Tesla’s Fremont, California, manufacturing facilities from at least 2015 until 2023, allegedly allowing it to occur and unlawfully seeking revenge against individuals who pushed back against it.
Furthermore, Musk’s SpaceX faces a lawsuit from the DOJ for allegedly discriminating in its hiring policies by excluding individuals seeking asylum and refugees, according to an August filing.
“I don’t think the whole administration has it out for me,” Musk stated. “But I think there’s probably aspects of the administration … or aspects of interests aligned with President Biden who probably do not wish good things for me.”
Elon Musk ‘acted like a little baby’ during Tesla’s terrible earnings call and ‘blamed high interest rates’ as profits fell to $1.85 billion, sending shares tumbling 15%
The backlash has been growing since the world’s richest man announced a 44 percent drop in profits at a ‘terrible’ earnings call with shareholders on Wednesday.
Elon Musk ‘acted like a little baby’ during Tesla’s terrible earnings call and ‘blamed high interest rates’ as profits fell to $1.85 billion, sending shares tumbling 15%
- World’s richest man was ‘close to tears’ as he struggled to defend falling profits to angry investors at ‘mini-disaster’ earnings call
- The tech titan played down prospects for the long-delayed ‘Cybertruck’ ahead of its planned roll-out next month
- Analysts warn that his honeymoon with the markets may be over with one promising ‘no more rose-colored glasses’
Elon Musk was ‘close to tears’ as he struggled to defend Tesla’s crashing profits to angry investors, prompting analysts to ask ‘is the story over?’
The backlash has been growing since the world’s richest man blamed interest rates for a 44 percent drop in net profits at a ‘terrible’ earnings call with shareholders on Wednesday.
Shares of the stock have slumped 15 percent in their worst week of the year after tycoon admitted ‘we dug our own grave’ with their long-delayed fully electric ‘Cybertruck’.
But it was his lack of ideas that angered investors long accustomed to allowing the tech visionary the benefit of the doubt.
‘For a leader to cry about the economy rather than funneling that and coming up with a plan is pathetic,’ YouTuber Kevin Paffrath told Yahoo Finance.
The famously emotional billionaire ‘acted like a little baby’, as he struggled to explain a 44 percent drop in Tesla’s profits at a ‘terrible’ earnings call with shareholders
Musk introduced the all-electric battery-powered Tesla Cybertruck at Tesla Design Center in Hawthorne, California on November 21, 2019
The bungled earnings call helped knock 15 percent of Tesla’s share price in less than a week
‘We need to know the light is at the end of the tunnel rather than hearing a complaining CEO who’s not actually providing that path.’
The famously emotional billionaire ‘acted like a little baby’, according to Paffrath, blaming rising interest rates for delays to the planned $10 billion Mexican gigafactory which will churn out batteries for his fleet of electric vehicles.
And he insisted it was the spiraling prime rate, which has risen from 3.5 to 8.5 percent in the last 18 months, which had crippled demand for his cars.
‘If interest rates remain high or if they go even higher, it’s that much harder for people to buy the car,’ he told his audience.
‘They simply can’t afford it.’
The company’s share of the electric vehicle market has slumped from 60 to 50 per cent in the last six months despite slashing prices by a quarter, with the cost of a Model Y sport-utility vehicle, now starting at $44,000.
There was more good news for consumers as Musk’s new CFO Vaibhav Taneja insisted that ‘reducing the cost of our vehicles is our top priority’.
Profits at the company fell to $1.9 billion in the three months to September, down $1.4billion on a year earlier.
Tesla’s year-over-year revenue growth was the weakest since the pandemic hit in the second quarter of 2020, and third-quarter earnings fell 37% to 66 cents per share, the lowest in two years.
In all it reported $23.4 billion in sales for the second quarter, down from analyst forecasts of roughly $24.2 billion.
The company has slashed prices by a quarter, with the cost of a Model Y sport-utility vehicle, now starting at $44,000
YouTube finance expert Kevin Paffrath slammed Musk for not charting a course out off Tesla’s financial troubles
Wedbush Securities analyst Dan Ives told businessinsider.com the call was a ‘mini disaster’, with Musk remaining silent about his company’s progress in developing its long promised autonomous vehicles.
‘We heard from a much more cautious Musk who focused on higher interest rates, AI investments, and highlighting the difficult path for Cybertruck production over the next 12 to 18 months,’ he added.
Musk has penciled in November 30 as the launch date for the Cybertruck but its price and final specifications are still a mystery.
It is four years since he showed off the prototype during an embarrassing launch event at which its ‘shatterproof’ window broke.
He has described it as a vehicle that will ‘change the look of the roads’, with ‘better utility than a truck with more performance than a sports car’.
But he told investors on Wednesday that it will be up to 18 months before it becomes a ‘positive cash flow contributor’.
‘Demand is off the charts,’ he insisted.
‘We have over one million people who have reserved the car, so it’s not a demand issue, but we have to make it, and we need to make it a price that people can afford, insanely difficult things.’
‘The blood, sweat and tears that will be required to achieve that is just staggering.’
He promised to further ‘invest significantly in AI development,’ but there was no repeat of his boasts about its ‘potential to make Tesla the most valuable company in the world by far’ with ‘fully autonomous cars at scale and fully autonomous humanoid robots’.
Shares in the company remain 96 per cent up on the start of 2023 but the company’s long honeymoon with market makers may be coming to an end.
‘No more rose-colored glasses,’ Wells Fargo analyst Colin Langan wrote in a note to investors.
‘How can we defend a ‘growth’ stock that appears ready to enter its 2nd consecutive year of earnings decline?’ asked Morgan Stanley’s Adam Jonas.
‘Five percent auto revenue growth, collapsing margins and trading at 200x FCF,’ concluded Toni Sacconaghi of Bernstein.
‘Is the story broken?’
Cybertruck timeline: Heavy duty vehicle was first unveiled back in 2019
November 2017: Elon Musk describes a concept of a ‘pickup truck that can carry a pickup truck’.
November 2019: Musk unveils the Cybertruck prototype. The windows get smashed in a botched demo.
January 2021: The CEO tweets that Cybertruck ‘doesn’t need a garage’ – because it offers sufficient protection on its own.
April 2021: Musk says he’s been ‘driving Cybertruck around the site where it will be built’.
September 2021: Musk said Cybertruck isn’t expected to go into production until late 2022.
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