Federal prosecutors are looking into Tesla performance claims after Reuters reported the electric carmaker exaggerated the potential driving distance of its vehicles, the Wall Street Journal reported on Wednesday.
Reuters reported in July that Tesla cars often fail to achieve their advertised range estimates and projections reported by the cars’ own equipment, citing experts who tested or studied them.
The company wrote algorithms about a decade ago to create “rosy” in-dash driving range estimates, Reuters reported a source as saying, and set up a “Diversion Team” to cancel range-related service appointments.
The Austin, Texas-based electric carmaker deployed the team because its service centers were inundated with appointments from owners who had expected better performance based on the company’s advertised estimates and the projections displayed by the in-dash range meters of the cars themselves, according to several people familiar with the matter.
Tesla faces many probes, including federal auto safety regulators looking at its Autopilot driver assistance product.
The U.S. Attorney’s office in Manhattan also is investigating Tesla’s use of company funds on a secret project described internally as a house for Chief Executive Elon Musk, the Journal reported on Wednesday, citing people familiar with the matter.
A spokesperson for the federal prosecutors’ office declined to comment on the Journal report on the probes.
Musk did not immediately respond to requests for comment.
What’s happend with Tesla?
The Securities and Exchange Commission and federal prosecutors are investigating Tesla for allegedly using company funds to construct a secret glass home for billionaire CEO Elon Musk in Texas, according to the Wall Street Journal, which reported in July the multimillion-dollar structure was subject to an internal company investigation.
Key facts
- The structure, known internally as Project 42, is being investigated by the U.S. Attorney’s Office for the Southern District of New York, which is seeking information about how much was spent on the project and personal benefits paid to Musk, people familiar with the matter told the Journal.
- The Journal also reported the SEC opened a civil investigation and is seeking similar information, though the news outlet noted both investigations are in early stages and Tesla might not face charges or formal allegations.
- Previous reporting by the Journal said the structure was described as a house for Elon, one that reportedly needed specialized glass worth millions and provoked an internal probe from Tesla board members who investigated potential misuse of funds and whether Musk was involved.
- SEC regulations require public companies to disclose perks paid to top executives, as well as any transactions exceeding $120,000 if a company representative has a “direct or indirect material interest” in the transaction.
- A spokesperson for the SEC told Forbes the agency “does not comment on the existence or nonexistence of a possible investigation,” while representatives for the DOJ, Tesla and Musk did not immediately respond to requests for comment.
The glass reportedly used for the project included large panels typically used on building facades. An investigation was triggered internally after an order was made for the glass, according to the Journal, which reported that the probe also investigated how much employee time was used on the secret project.
The glass order was first reported by Bloomberg last year, when people familiar with the matter said it was flagged to internal audit groups. If the construction of a glass house for Musk is ever confirmed, it would brush against the tech billionaire’s supposed preference for a low-maintenance lifestyle.
Musk said two years ago his primary residence was a $50,000 south Texas home rented from his company, Spacex, noting the only house he owned at the time was an “events house in the Bay Area.”
Findings from the Journal contradicted Musk’s claims after reporting he lived in a multi-million square-foot mansion owned by Ken Howery, PayPay’s co-founder and Musk’s friend.
