Elon Musk, Tesla attack SEC for 'unrelenting' harassment

February 17, 2022

NEW YORK, Feb 17 (Reuters) - Tesla Inc and its Chief Executive Elon Musk on Thursday accused the U.S. Securities and Exchange Commission (SEC) of harassing them with an "endless" and "unrelenting" investigation to punish Musk for being an outspoken critic of the government.

The accusation came in a letter to U.S. District Judge Alison Nathan in Manhattan, who presided over a 2018 SEC settlement stemming from Musk's tweet about a potential buyout of Tesla.

"Mr. Musk and Tesla respectfully seek a course correction," wrote Alex Spiro, a lawyer for Musk and Tesla. "Enough is enough."

The SEC declined to comment.

Thursday's letter escalates Musk's battle with regulators as they scrutinize his social media posts and Tesla's treatment of workers, including accusations of discrimination.

It followed Tesla's disclosure on Feb. 7 that it had receiving a subpoena from the SEC about its compliance with the 2018 settlement.

The SEC sued Musk in August 2018 after he tweeted he had "funding secured" to potentially take his electric car company private at $420 per share. In reality, a buyout was not close.

Tesla and Musk settled by agreeing to each pay $20 million in civil fines, and to let Tesla lawyers vet some of Musk's communications in advance, including tweets that could affect Tesla's stock price. Musk also gave up Tesla's chairmanship.

The latest subpoena was issued on Nov. 16, ten days after Musk polled his Twitter followers on whether he should sell 10% of his Tesla stake, triggering a sell-off.


CHILLING SPEECH

In Thursday's letter, Spiro accused the SEC of ignoring its commitment to distribute to shareholders the $40 million in fines, while instead "devoting its formidable resources to endless, unfounded investigations" into Musk and Tesla.

"Worst of all, the SEC seems to be targeting Mr. Musk and Tesla for unrelenting investigation largely because Mr. Musk remains an outspoken critic of the government; the SEC's outsized efforts seem calculated to chill his exercise of First Amendment rights," Spiro wrote.

Spiro asked Nathan to schedule a conference to find out why the SEC is "issuing subpoenas unilaterally" without court approval, and why the money isn't being distributed.

If the SEC found that Musk violated the settlement, it could ask Nathan to throw it out and reopen the case, or pursue new charges.

The letter was filed eight days after California's Department of Fair Employment and Housing sued Tesla over allegations by Black workers that it tolerated racial discrimination at its Fremont, California, plant.

Tesla called that lawsuit misguided. It is also trying to reduce or throw out an approximately $137 million jury award to a Black former elevator operator for subjecting him to a hostile work environment at the Fremont plant.

Tesla CEO Elon Musk accuses SEC of leaking information from federal probe

Feb 21 2022

Tesla CEO Elon Musk, via his attorney, accused the Securities and Exchange Commission of leaking information about a federal investigation in order to retaliate against him for public criticism of the federal financial regulators.

In a letter on Monday to U.S. District Judge Alison Nathan, Musk attorney Alex Spiro wrote: “It has become clearer and clearer that the Commission is out to retaliate against my clients for exercising their First Amendment rights—most recently by criticizing the Commission on the public docket and by petitioning this Court for relief.”

The letter comes four days after Musk initially alleged that the SEC was engaged in harassment by continually investigating him, that the agency was trying to chill his right to free speech, and had neglected their duties to remit $40 million to shareholders that Tesla and Musk previously paid in fines to settle securities fraud charges.

Spiro did not specify which investigation or what type of information may have been leaked by the SEC, and to whom. In the letter, he alleged that at least one member of the SEC had leaked “certain information regarding its investigation” without providing any supporting evidence.

The SEC’s Steven Buchholz. . . also wrote that ongoing communication with Tesla was what Nathan and the revised settlement agreement had called for, and that if Musk objected to any subpoena his attorneys should address that in a different motion. There’s a different federal statutory scheme for objecting to a subpoena.

Tesla disclosed in a 2021 fourth-quarter earnings report that the SEC issued a subpoena to the company in November 2021. According to Tesla’s quarterly filing, the agency is seeking information on its “governance processes around compliance with the SEC settlement, as amended.”

Spiro revealed in the letter on Monday some details about that subpoena. He wrote, “the Commission specifically demanded documents concerning my clients’ ‘compliance or non-compliance with Tesla’s disclosure controls and procedures, executive communications policy, external communications policy, other policies or procedures relating to public statements or communications by Tesla executives, or the final judgment or amended final judgment in SEC v. Musk, 1:18-cv-8865-AJN (S.D.N.Y.).’

He also said the SEC issued a separate, but similar subpoena to Musk.

The November subpoena came shortly after Musk polled his tens of millions of Twitter followers in asking if he should sell 10% of his stake in Tesla. They voted yes. But a major portion of the sales that followed the Twitter poll were part of a plan that Musk adopted in September 2021.

Judge rejects Tesla CEO Elon Musk’s attempt to bring SEC before the court

Thu, Feb 24 2022

A U.S. federal district judge rejected Elon Musk’s attempt to bring the Securities and Exchange Commission before the court in an order out Thursday.

The Tesla CEO, via his attorney Alex Spiro, had alleged in letters to the court this month that the SEC had: leaked information about a federal investigation to an unidentified party, harassed Musk and Tesla with continuous investigation, and neglected their duties to remit $40 million to shareholders that Tesla and Musk had previously paid in fines to settle securities fraud charges.

In letters from his attorney this month to the court, the CEO characterized the SEC as making a “calculated effort” to “chill” his right to free speech, and alleged them of sending subpoenas, including one in November 2021, in order to retaliate against him for public criticism of the government.

On Twitter, where Musk has amassed tens of millions of followers, this week the CEO said he has been “building a case” against the SEC but he did not provide specific details.

In her order on Thursday, Judge Alison Nathan noted that there was never a deadline established for the SEC to disburse the $40 million to shareholders, but she said Musk could file a motion to set one. She wrote, “Otherwise, the Court cannot enforce a deadline that does not currently exist.”

She also said that Musk -- if he wanted to challenge a subpoena by the SEC -- would need to “have a non-frivolous basis” to do so and could file a motion to quash a subpoena, with a briefing to request “specific relief from the Court.”

On Musk’s allegation that the SEC had leaked information about a federal investigation to an un-named entity, the judge noted that his attorney’s letter to the court did not “contain specific facts or legal authority to justify” a request for “on-the-record assurance that the Commission has not leaked investigative details.”

Read the full court order here:


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SHANGHAI – Tesla plans to start work on a new plant in Shanghai as soon as next month as part of a plan to more than double production capacity in China to meet growing demand for its cars in the country and export markets, two people familiar with the matter told Reuters.

Once the new plant is fully operational, Tesla will have the capacity to produce up to 2 million cars per year at its expanded Shanghai facility, the company's main export hub, according to the people, who asked not to be identified in discussing still-private plans.

The new plant will be located in the vicinity of its existing production base in Lingang, Pudong New Area.

Tesla declined to comment.

The expansion, if it goes ahead, would give Tesla EV-dedicated production capacity in the world's largest auto market on a par with more established brands in China.

In comparison, Toyota Motor Corp produced 1.6 million vehicles in China in 2021. General Motors produced 1.4 million with its major Chinese partner SAIC Motor Corp. Volkswagen plans to have capacity to make 1 million EVs in China by 2023.

The cost of the planned expansion and Tesla's timetable for completion were not immediately known.

Tesla started production at its Shanghai plant — also known as the Gigafactory 3 — less than a year after breaking ground. The plant makes the Tesla Model 3 sedan and the Model Y crossover.

Expansion plans for the existing plant aim to put Tesla on track to produce around 1 million vehicles this year, two sources familiar with the expansion plans told Reuters, though one said this also depended on the availability of parts.

Tesla has projected to take its weekly production to about 22,000 vehicles at the plant in the coming months, one of the sources said.

That production rate would amount to about 1.1 million vehicles over a year, more than double the plant's original projected capacity.

Reuters previously reported that Tesla could expand its capacity on the existing site.

The Shanghai city government did not immediately respond to a request for comment.

Shanghai has been a supporter of Tesla's establishment of a wholly-owned factory in China — the first foreign auto plant not required to form a joint venture with a Chinese partner.

In a regulatory filing with Shanghai earlier this week, Tesla said it planned to expand parts production at its Shanghai factory, hiring additional workers and running its factory for longer in a day, to meet growing export demand.

Tesla sales have surged in China and its Shanghai factory has become a crucial export hub to markets such as Germany and Japan. Last year, Tesla's China-made cars accounted for around half of the 936,000 vehicles it delivered globally, based on Reuters calculations using China Passenger Car Association data.

Earlier this month, Tesla said its China revenue more than doubled in 2021 to $13.8 billion from the previous year. Elon Musk also said in October that Shanghai had surpassed its Fremont, California factory — the company's first plant — in output.

Tesla has faced delays in opening a plant in Germany. Musk had originally aimed to open a Berlin plant in July last year. Approval for the plant has been complicated by a court case challenging a license granted to its water supplier.

Ethan Joseph is a proud Tesla customer and also a Ford F-150 Lightning reservation holder. He had three EVs from the brand before ordering his Model X Plaid. At delivery, he was surprised to see the SUV had a different set of tires: summer Michelin Latitude Sport 3 tires in the front axle and all-season Continental Crosscontact LX Sport in the back.
6 photos

Although people believe it is ok to have different tire sets as long as they are of the same model in each axle and have the same measures all around, that’s not really the case. Summer tires are grippier than all-season units. On top of that, the Tesla Model X is an AWD vehicle. The differences in traction may cause the car to spin, especially at high speed.

Joseph shared his experience on Twitter, and it was just the beginning of more discoveries about how Tesla is messing up tire assembly. People soon shared a Reddit post that showed a Tesla Model Y Performance with different tires on the driver and passenger sides.

The user Ijustg0tHere said he picked up his wife’s 2022 EV on February 26. On March 2, after applying a ceramic coat to the car, he noticed that the vehicle had a Michelin Pilot Sport All-Season 4 tire on the right rear wheel and a summer Pirelli P Zero Elect rubber on the left rear wheel. Their measure is 275/35 R21.

Ironically, the user SomniacsAlterEgo asked him if it was made in Fremont and joked they had probably swapped the tires in their cars. The Model Y Performance that belongs to this user had the Michelin Pilot Sport All-Season 4 tire on the right front wheel and the summer Pirelli P Zero Elect tire right next to the driver’s door. The front tires are 255/35 R21, which makes the swap hypothesis not very plausible.

Delivered this way, these tires represent an even greater risk of problems. The traction difference will make the car more difficult to control in hard acceleration and really dangerous in slippery conditions or rainy days. Mixing tires in the same axle is the sort of mistake that can cost a person willing to save some bucks a lot. Receiving a brand new car in these conditions is inexcusable.

The Tesla Service Center told Joseph that they had never seen that before. The Reddit users heard similar excuses. For Joseph, it was a no-go. According to another tweet, he refused delivery. Ironically, he had already ordered the doormats for his new car. They were not returned.

We’d ask Tesla about these three cases if the company had a press department to deal with this sort of issue. Since it doesn’t, we’ll probably learn about other cases until NHTSA (National Highway Traffic Safety Administration) decides to check what the heck is going on with tire assembly or Tesla chooses to make a voluntary recall to fix this as soon as possible. This is a safety hazard that primary quality control could avoid, and no OTA (over-the-air) update can fix.

An interesting story was recently reported by the Chinese media about a strange bug in the Tesla Supercharging billing system.

According to CnEVPost (after Weibo user @滤镜粉碎机), a Chinese Tesla Model 3 user received an alert from the Tesla app that his vehicle is banned from the Tesla Supercharging network due to unpaid fees of 3,846,306 CNY ($608,708).

Such a high amount for charging sounds weird, especially since the user had some free Supercharging credits.

CnEVPost's article includes images that show 1,923,720 kWh (almost 2 GWh) of energy, at 2 CNY per kWh.

According to the estimations - it would be enough to fully charge the 2020 Tesla Model 3 Standard Range Plus (0-100%) about 32,000 times.

The extreme bill happens to be an obvious mistake and according to further info, the user received a response from Tesla customer service, saying that "there was an error in the back-end systems of some vehicles." It will be fixed.

Nonetheless, it means that there might be more than one user that faced a shocking notification and was mistakenly banned from Supercharging.

We don't know what caused the issue, but according to the article, Tesla was tweaking the Supercharging idle fee to improve the utilization of the charging stalls. The new idle fee in China is 3.20 CNY per minute (6.40 CNY if the station is 100% occupied).

For reference, in the US, the idle fee stands at $0.50 per minute ($1.00 if the station is 100% occupied). In many European countries, including Germany, the numbers are the same but in euros (€0.50 or €1.00 per minute).