Elon Musk's 'secret house' project triggers fed probe of Tesla

September 04, 2023: On Wednesday, the Wall Street Journal first noted that federal prosecutors with the U.S. Attorney’s Office for the Southern District of New York and, individually, the Securities and Exchange Commission are seeking information about how much Tesla has spent to plan and build a secretive project, reportedly a big glass house in more excellent 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 intentionally misrepresented the battery range for its electric cars. Reuters reported in July that Tesla electric cars often need to catch up to the company’s advertised range and that the cars’ touchscreens display inaccurate remaining content to drivers.

Such investigations do not always lead to a finding of wrongdoing. However, the new probes add to a litany of other studies that Tesla faces from state and federal regulators.

In its last quarterly earnings report, Tesla disclosed, “We receive requests for details from regulators and administrational authorities, like the National Highway Traffic Safety Administration, the National Transportation Safety Board, the Department of Justice and different state, federal, and international agencies. We routinely cooperate with regulatory and governmental requests, including subpoenas, formal and informal requests, and other investigations and inquiries.”

In September 2018, the SEC charged Elon Musk and Tesla with civil securities fraud over the CEO’s tweets that said he was considering taking Tesla private at $420 for each share and had secured funding. 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 regarding 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.”