Friday, 16 November, 2018


Tesla faces Federal Bureau of Investigation probe over Model 3 numbers

Tesla finally posts a profit Why almost everyone was wrong about Tesla's cash flow situation
Conrad Doyle | 27 October, 2018, 20:49

Six months ago, Tesla was struggling to produce 2,000 Model 3 sedans a week while Elon Musk slept on the factory floor.

The Journal reported that the FBI is investigating whether the company made projections about its Model Three production knowing it would be impossible to meet those goals.

The FBI is reviewing Tesla's Model 3 production numbers as a part of a deepening criminal probe into the company, according to a report.

The Wall Street Journal described the Justice Department's probe of the Model 3 as "deepening", saying the Federal Bureau of Investigation in recent weeks had sought to interview a number of former Tesla employees who had been subpoenaed earlier.

Tesla had disclosed on September 18 that it received a "voluntary request" for documents from the Justice Department.

Tesla has battled widespread scrutiny, following Musk's August 7 tweet that he was planning to take Tesla private and had "funding secured".

Prior to Q3 2018, Tesla has only had two profitable quarters since going public in 2010, and Musk's affirmations of profitability by the end of 2018 had been met with deep scrutiny. Gross margins on the Model 3 are above even the company's own lofty expectations and its position as the 5th most popular auto by volume in the U.S. suggests it's drawing in a wide range of customers despite its comparatively high price point. That process proved hard, although the company succeeded in meeting it target.

For now, Tesla must focus on continuing to make money to stay afloat, with about $10 billion in debt that has been taken on while Musk has pursued his ambition to create a viable automaker that makes cars running on something besides gasoline. According to Tesla, the amount of production hours needed to make the Model 3 dropped by almost a third. We can expect Tesla to ramp up spending for one or more of these products in the next few months, which will create a drag on free cash flow.

For the same period a year earlier, the company reported a loss of US$619 million. The company generated positive cash flow of $1.4 billion in the third quarter, compared to a negative $301 million at the same time a year ago.

He is counting on strong demand in Europe and China, where Tesla plans to start selling Model 3s next year.

The comments were made when Musk was sharing updates on Tesla's third-quarter earnings, which showed a surprising profit. But Wood's biggest hopes for the company concern software, and she worries those lofty mobility-as-a-service goals won't come to fruition if Tesla goes private.

Tesla is now generating cash, not consuming it and has largely managed to silence critics for the time being.

As it stands, Musk has stated that the Tesla Model Y crossover will probably arrive sometime in late 2019 or in early 2020.

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