Tesla says Justice Department and SEC are investigating Model 3 production targets

  • The SEC, which just settled its securities fraud investigation against CEO Elon Musk and the company, has subpoenaed Tesla for Musk's statements about production rates regarding its popular Model 3 sedan.
  • DOJ prosecutors have also asked for the same information, although it stopped short of issuing a formal subpoena, the company says in a filing.
Elon Musk 
Joshua Lott | Getty Images
Elon Musk 

The Securities and Exchange Commission and Justice Department are investigating Tesla's Model 3 production projections, the company said in a regulatory filing Friday.

The filing confirms much of an Oct. 26 article in The Wall Street Journal that said FBIagents were looking at whether Tesla misled investors about production of its Model 3 sedans. The FBI is the principal investigative arm of the Justice Department.

The SEC, which just settled its securities fraud investigation against CEO Elon Musk and the company, has separately subpoenaed Tesla for Musk's statements about production rates regarding its popular Model 3 sedan, the company said. DOJ prosecutors have also asked for the same information, although it stopped short of issuing a formal subpoena, the company said in a filing with the SEC.

The WSJ said the U.S. attorney's office in San Francisco was handling the criminal probe.

Musk denied the validity of the article in an interview with Kara Swisher of Recode that was posted Friday.

"The amount of untruthful stuff that is written is unbelievable. Take that Wall Street Journal front-page article about, like, 'The FBI is closing in.' That is utterly false. That's absurd," Musk told Swisher. "To print such a falsehood on the front page of a major newspaper is outrageous. Like, why are they even journalists? They're terrible. Terrible people."

Tesla previously confirmed that DOJ was investigating its production numbers, saying it hadn't received a formal subpoena from the department. The company never mentioned anything about the SEC's subpoenas until Friday's filing.

We receive requests for information from regulators and governmental authorities, such as the National Highway Traffic Safety Administration, the National Transportation Safety Board, the SEC, the Department of Justice ("DOJ") and various state agencies. We routinely cooperate with such regulatory and governmental requests.

In particular, the SEC has issued subpoenas to Tesla in connection with (a) Mr. Musk's prior statement that he was considering taking Tesla private and (b) certain projections that we made for Model 3 production rates during 2017 and other public statements relating to Model 3 production. The DOJ has also asked us to voluntarily provide it with information about each of these matters and is investigating.

Aside from the settlement with the SEC relating to Mr. Musk's statement that he was considering taking Tesla private, there have not been any developments in these matters that we deem to be material, and to our knowledge no government agency in any ongoing investigation has concluded that any wrongdoing occurred. As is our normal practice, we have been cooperating and will continue to cooperate with government authorities. 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, and financial position.

The news came out of a filing in which Tesla also said it plans to spend up to $6 billion in 2019 and 2020 on factories and equipment.

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