Tesla and Elon Musk settled with the Securities and Exchange Commission (SEC) over his infamous “funding secured” tweet in September, but the company’s legal woes continue.
Reuters reports the automaker has confirmed it received a subpoena relating to the company’s projections about Model 3 production in 2017. In effect, the company’s tendency to overpromise and underdeliver could come back to haunt it.
When the Model 3 was launched in 2017, the company was optimistic about quickly ramping up production of the highly anticipated model. In its 2017 third quarter update, Tesla proudly proclaimed the “Model 3 has been designed for manufacturability, so the car itself is not difficult to build.” While the company admitted there would be challenges, it said “we currently expect to achieve a production rate of 5,000 Model 3 vehicles per week by late Q1 2018.”
In Tesla’s fourth quarter update of 2017, the company revised the forecast and said “We continue to target weekly Model 3 production rates of 2,500 by the end of Q1 and 5,000 by the end of Q2.” That’s a pretty significant change and one that the government will probably be looking into.
The news of the SEC investigation isn’t too surprisingly as Tesla has previously revealed the Department of Justice had asked the company to voluntarily provide information about “certain projections that we made for Model 3 production rates during 2017 and other public statements relating to Model 3 production.” At the time, Tesla said it was cooperating with authorities and stated “to our knowledge, no government agency in any ongoing investigation has concluded that any wrongdoing occurred.”
The SEC isn’t the only one probing Model 3 production as a proposed class action lawsuit was filed on behalf of stockholders last year. The suit claimed Tesla violated federal securities laws and made materially false and misleading statements regarding their preparedness to produce the Model 3. The original complaint was dismissed, but it has since been amended and refiled.
In an SEC filing, Tesla said it believes the suit is “without merit” and plans to vigorously defend itself. As part of this effort, Tesla will ask for the suit to be dismissed.
