Technology
Thursday, August 31st, 2023 9:08 am EDT
Tesla is reportedly facing two new federal probes over possible misuse of company resources by or for the personal benefit of CEO Elon Musk.
The Wall Street Journal first reported on Wednesday that federal prosecutors with the U.S. Attorney’s Office for the Southern District of New York and, separately, the Securities and Exchange Commission, are seeking information about how much Tesla has spent to plan and build a secretive project, reportedly a spacious glass house in greater Austin, Texas, thought to be for Musk’s personal use.
The report also said that the Manhattan federal prosecutors were separately looking into whether Tesla had deliberately misrepresented the battery range for its electric cars. Reuters reported in July that Tesla electric cars often fall short of the company’s advertised range and that the cars’ touchscreens display inaccurate remaining range to drivers.
Tesla and the Manhattan federal prosecutor’s office did not immediately respond to a request for comment. The SEC public affairs office told CNBC via email that the agency “does not comment on the existence or nonexistence of a possible investigation.”
Such investigations do not always lead to a finding of wrongdoing. However, the new probes add to a litany of other investigations that Tesla is facing from state and federal regulators.
In its last quarterly earnings report, Tesla disclosed: “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, federal, and international agencies. We routinely cooperate with such regulatory and governmental requests, including subpoenas, formal and informal requests and other investigations and inquiries.”
The SEC in September 2018 charged Elon Musk and Tesla with civil securities fraud over the CEO’s tweets that said he was considering taking Tesla private at $420 per share and had funding secured to do so. The company and Musk struck and later revised a settlement agreement with the agency requiring the CEO to relinquish his role as chairman for three years at Tesla, and have his tweets reviewed by a securities lawyer within Tesla before posting them, should they contain material business information.
Following that revised settlement agreement, the SEC has issued subpoenas to Tesla concerning its governance processes and compliance in regards to their settlement agreement.
Tesla also disclosed in its second-quarter financial filing for 2023 that the DOJ has sought documents “related to Tesla’s Autopilot and FSD features.”
The National Highway Transportation and Safety Administration recently revealed that it is close to delivering a conclusion for an investigation into possible safety defects in Tesla’s driver assistance systems, marketed as the standard option Autopilot, and premium options Enhanced Autopilot, Full Self-Driving and FSD Beta in the US. The NHTSA investigation was initiated after a string of crashes in which Tesla vehicles with Autopilot systems installed reportedly crashed into stationary first responders’ vehicles.
Read The Wall Street Journal’s story here.
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