Tesla's Nonsensical SEC Investigation on Model 3 Production Estimates Is Over

The Securities and Exchange Commission (SEC) officially ended its investigation on Tesla’s Model 3 production estimates back when the vehicle was just beginning its ramp, way back in 2017. With this development, the EV automaker may finally be able to breathe a little bit easier. 

According to Tesla, the SEC closed its 2017 Model 3 production investigation on December 4, 2019. The documents can be found, here. "On December 4, 2019, the SEC (i) closed the investigation into the projections and other public statements regarding Model 3 production rates," Tesla wrote in its 10-K form. 

The SEC investigation first started when Tesla was unable to meet its internal Model 3 production targets in 2017, when the vehicle just started its production. Following the vehicle's initial handovers to Tesla employees in mid-2017, Elon Musk estimated that the Model 3 will have a production rate of 5,000 units per week by the end of the year. 

This target was not met until mid-2018, six months later than Musk's initial expectations. While this was eventually made irrelevant in the grand scheme of things, especially as the Model 3 ramp accelerated, but it did result in a class-action lawsuit filed against the company. 

The shareholders who filed the lawsuit claimed that Musk had deceived them with his misleading statements about Tesla’s Model 3 production. The said statements had reportedly caused them to buy Tesla stock at an “artificially inflated” price.

Credit: Tesla

The SEC was eventually involved in the investigation to determine if Tesla really did mislead investors with Musk's publicly-announced estimates. That said, U.S. District Judge Charles Breyer in San Francisco sided with Tesla on the matter, and the original case file was dismissed in August 2017.

However, the plaintiffs were allowed to amend their suit, and the case was brought to Judge Breyer again in 2019. The second time it was brought to him, the Court sided with Tesla again.

To the majority of TSLA shareholders, the SEC investigation was nonsensical because the company eventually overcame the Model 3's production hell. Loyal Tesla shareholders were patient with the company's Model 3 production issues and waited for the EV automaker to find a solution to it, without ever doubting it would be resolved. And it did, though it took some time. 

With this recent update, Tesla has finally put the SEC’s investigation on Model 3 production estimates behind it. Tesla appears to have no intention of looking backwards either. The EV automaker recently announced its intention to offer $2 billion of common stock in an unwritten registered public offering.

Tesla CEO Elon Musk has already announced his intention to purchase up to $10 million of the common stock offering. Tesla board member and Oracle co-founder Larry Ellison said that he would purchase up to $1 million of common stock from the funding round as well.

A majority of the Tesla community sees the company’s $2 billion common stock offering as a good move. According to ultra TSLA bull Cathie Wood, the $2 billion+ offering “makes sense.” Tesla shared that the move would help “strengthen its balance sheet” and its proceeds would be used for “general corporate purposes.”

Tesla's full 10-K SEC form can be accessed here. 

Featured Image Credit: Tesla

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This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Claribelle Deveza, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

Claribelle Deveza holds zero share of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.