DOJ Intensifies Scrutiny on Tesla as Challenges Mount
ICARO Media Group
The road ahead is appearing increasingly challenging for Tesla (TSLA) as the company faces deepening federal scrutiny. Following disappointing earnings reports, the electric vehicle (EV) manufacturer revealed that its automated driving systems are now under investigation.
In a Securities and Exchange Commission (SEC) filing on Monday, Tesla disclosed that the Justice Department has issued subpoenas, requesting the company to provide documents related to its autopilot and full self-driving features. Additionally, Tesla received requests for information on various other matters, including personal benefits, related parties, vehicle range, and personnel decisions.
This intensified scrutiny by the Justice Department comes after reports from August, where federal prosecutors started investigating allegations of misusing company funds to construct a glass house commissioned by CEO Elon Musk. However, Tesla did not confirm if the glass house was among the issues being probed by the agency.
Tesla initially revealed the Justice Department's requests for information about its autopilot and self-driving features in January. However, the recent revelation that subpoenas have been utilized suggests that the agency has escalated its inquiries.
Although Tesla did not elaborate on the specific nature of the subpoena requests, they stated that, to their knowledge, no government agency involved in any ongoing investigations has concluded any wrongdoing.
Various news organizations, including Reuters, have reported that Tesla's vehicles often fail to achieve the expected driving range on a full charge. Last year, federal prosecutors initiated a criminal investigation into Elon Musk's statements from as early as 2016 regarding Tesla's "self-driving" features.
On its website, Tesla explicitly states that its vehicles are not self-driving, and features such as automatic braking and lane correction are intended to be used by fully attentive drivers with their hands on the wheel at all times.
These new probes by the Justice Department further entangle Tesla in legal hurdles, as it seeks to recover from a third-quarter earnings report that fell short of analysts' expectations. The company reported top-line revenue of $23.4 billion, missing estimates of $24.06 billion. Year-over-year revenue increased by 13%, while adjusted earnings per share (EPS) stood at $0.66, lower than the expected $0.74. Adjusted net income was reported at $2.3 billion, below the estimated $2.56 billion.
The intensifying scrutiny from the Justice Department adds to the growing challenges that Tesla must navigate in the coming months. The company's ability to address these issues effectively will be critical in regaining investor confidence and positioning itself for sustained growth in the electric vehicle market.