Tesla Fraud Investigation [Securities & Wire Fraud]

well well well the SEC is back after Elon Musk and Tesla well actually they kind of haven't stopped being after Elon Musk and Tesla for a while now but Reuters as you've probably already heard is reporting that there are the potential wire fraud allegations against Tesla for misleading statements a puffery or misleading basically salesmanship to investors of Tesla stock for the performance of full self-driving now before we get into what all of that actually means for Tesla I think it's worth clearing up two things up front number one I think it's always been clear that full self-driving is a beta software and it's quite frankly the best software that exists on the road today is it 100% autonomous no of course not but don't think that it's ever sold as that now that might not necessarily be the sec's problem here because quite frankly I think that would be a hard problem to win I think the bigger argument that the SEC has is with Elon Ms uh Elon musk's Elon Ms oh no Elon musk's expectations or forecasts around when certain things would be available such as when we would hit certain forecast uh targets for the full availability of FSD which as we know keeps getting kicked down the road uh how many cyber trucks and when we might see them how many semi trcks and when when we might see the Roadster these sorts of patterns of promises that well they're not necessarily no longer happening they're certainly taking a whole lot longer to achieve and it'll be something where the SEC might try to use promises that Elon makes in conjunction with promises around hey a $25,000 vehicle hey look at our Dojo supercomputer system hey look at our 4680 cells and how these will be the future and soon every car will be using dojo and 46 80s and soon we'll have the $25,000 car and the SCC might try to allege hey well now you're saying 4680 are a hedge well that's not what you told folks on battery day that you're really only making these now for the Cyber truck it was supposed to be for everything but that's not happening now because obviously uh Chinese batteries are quite frankly cheaper lithium prices have collapsed and some of the success of the 4680 technology just hasn't really been up to Snuff same thing with Dojo Dojo was supposed to be the future now it's h100s so I'm not pooping on those programs but let's be real investors were sold this and we're probably you know here making our way up to there if anything kind of like bleeding out a little bit on some of these now what I want to be clear about is I'm not a Tesla bear this whole video isn't to say oh you know we should listen to Reuters and be worried about Reuters or we need to be uh concerned about what's going to end up happening here with the SEC I'm simply trying to understand and I I thought about this this morning what could the SEC potentially strain together we know they've been investigating Tesla's FSD since 2020 we know that they've been subpoenaing folks quite frankly uh at least since October of 2023 I mean here's a piece on that Us justice department has sought documents and issues subpoenas to Tesla in conjunction obviously with the Security and Exchange Commission and then when the SEC finds something they can refer it to the doj who can actually file a criminal complaint so I got to thinking about this a little bit what what is this actually like why is this happening and then what does this mean as a Tesla shareholder okay so first things first why is this happening I really hate to say it but I think a lot of this can be spawned by elon's attitude towards The Regulators now not we all know every person isn't perfect everybody makes mistakes and Regulators realize that like hey you screw up as you know a publicly listed company or whatever uh you know you might have to pay a fine uh and issue corrective action and come up with a plan so that you don't screw up again in the future just to go like extreme with this right look at basically the audit sham Mill BF borgers they uh were just shut down by the SEC uh that was the company the Trump spack hired but they didn't actually do any work for the Trump spack yet uh but this audit Mill at least the allegation goes basically just took old Audits and changed dates and passed them off as new ones they're doing like three to four audits per employed person or or three to four x the number of audits per employed person that other audit firms were doing leading to a lot of suspicions that they weren't actually auditing that they were kind of just falsifying documents and you know checking off boxes that weren't supposed to be checked that company got finded 10 million bucks and the CEO got fin $2 million now obviously those are big numbers but for a corporation it's like okay that's probably and again we have to say probably and allegedly a blatant fraud and that was their fine now they're not the size and magnitude of Tesla but those are the sorts of frauds that the SEC is trying to shut down you know if if you had a goal and uh you screwed up on your goal and you made it really clear like hey look here's what the goal is with FSD here's we are now where we are now here's what has to happen to get to this goal and you fall short maybe that's not that big of a deal maybe that's the entrepreneurial Spirit and the SEC I don't think would really go go after Tesla for that I think what's more is that it almost sometimes feels like Elon Musk is purposefully trying to spite The Regulators and then The Regulators are then sort of dare I say looking for all right well we could play that game too and the best comparison I can give you is or uh example I should say I could give you is when Elon Musk said Hey look I'll meet you SEC and we'll do our deposition together I'll come to your office and I'll do a meeting this was late last year two days before he cancels going to visit the SEC Weeks Later goes completely dark on the SEC SEC suggests hey can you come visit us at any of these offices around the country can we get this done we'll accommodate you anywhere let's get this done it basically got to the point of a court having to compel Elon Musk to testify or or to provide you know whatever information or to the interview that the SEC wanted and I think it's that sort of blatant spiting of uh Regulators that has Regulators going hm okay well if you're going to spite us is it because maybe you're trying to hide something and let's go investigate this a little bit and then what do they do they subpoena employees or how about all the employees that just got fired it's not that hard for them to subpoena a bunch of employees who just got fired and put together some kind of basically you know thorough thoroughly exemplified complaint with the in conjunction with the Department of Justice where they're basically able to go here's what Elon Musk said to investors 4680 you know that's the future I mean we should look it up battery day Tesla right so battery day Tesla was September 2020 and that was the annual meeting of stock uh share holders basically uh and uh battery day and they put together this gorgeous uh uh battery Day presentation this was it uh and uh you know we got a little bit of enthusiasm and excitement but about you know future product lines and future features I remember covering this it was really really exciting uh this was so fun everybody was so excited about what Tesla was up to uh and so this is where they gave this basically demonstration of how amazing uh they've come up with the technology to create this evolution in a product but here they're pitching 50 plus% energy density now some of that obviously will be because of volume because it's obviously a larger battery it's kind of like a AAA Battery to a doublea battery this is the way I like to look at it uh but some of these promises the SEC will probably go to and look at and say okay so here's a you know 468 8 cell 16 plus% range 5x the energy uh 14% uh uh cost per kilowatt reduction where is that now and we're going to get to introducing this into every single uh vehicle uh that Tesla creates and the goal is that by 2022 we're going to have 100 gwatt hours and 3 terawatt hours of battery production uh by 2030 well mind you we're in 2024 and we're nowhere near maybe even 10% of 4680 capacity right now because the only thing we're making these for are cyber trucks so if the only thing we're making these for are cyber trucks uh let's see kilowatt hours cyber truck let's see the current is 123 kilowatt hours right kilowatt hours so we're going to create let's go uh we'll call this 123k dubs let's say 10,000 have been created then we really have 1 2 million uh kilowatts 1.2 million kilowatts okay well what is 100 gaws here you go 100 gwatt hours is actually oh boy what do we have here that looks like 100 million kilowatt hours so we're supposed to be at 100 million kilowatt hours for the new batteries by 2022 so 2 years ago and cybertruck is maybe 1/ 100th of that so unfortunately there are going to be a lot of opportunities for and this this is just one example right Dojo being a hedge 4680 being the nonpreferred battery now the $25,000 car the Roadster they've taken deposits for but I I don't think it's anywhere near on a sort of promises that the SEC is going to look at in writing and go is this just a pattern of Elon Musk creating expectations that end up falling through blomberg Intel actually did a pretty good piece breaking down why the 4680 just isn't as efficient as expected and so while this was really cool hope and theoretical science it just didn't end up working out the way Tesla expected the problem with this is investors are sold these visions and then they don't necessarily come true so what does that mean as an investor is Tesla bad investment well that's separate see I still think that Tesla has a phenomenal upside in not just FSD licensing but primarily just selling cars at a high margin that's still the biggest way that I underwrite Teslas and I personally think you can almost collapse the value of FSD into the value of the car and for probably at least the next 5 to 10 years you've really got a vehicle that you can't compete against see in the longer term I don't think people will actually buy a car because it has full self-driving in it I think every car will have full self-driving in it so it kind of go back to buying a car because it's a car and it'll just come with a full self-driving stack inside of it so manufacturing Teslas and making Tesla's ubiquitous is always going to be what's very very important to Tesla other companies will solve full self-driving as well so as a long-term investor for Tesla uh although I do fundamentally trade it to take advantage of tax scenarios which I think everybody should but that's on them uh it's not personalized advice obviously it's broad broad suggest question I think that this investigation in Tesla is not necessarily A Bad Thing uh but it's certainly not a good thing like we know it's not good uh and I wouldn't say it's something that says you know run for you know Run for the hills or whatever to get out of Tesla because the SEC and the doj may end up putting together some form of fraud complaint against Tesla I can already see the headline Tesla charged with massive fraud over seven years or what ever due to elon's promises and then what they do is they put together a list of here all the claims here are the employees on the inside on record going yeah that's yeah that's yeah that's that's uh and then here are the new promises from Elon what do we expect is that pattern is what they'll establish and that's going to look really bad now do I really think that uh whatever punishment could potentially come out of a criminal complaint uh which could end up just being like paying back money to sharehold holders or or uh you know some form of fines or a combination of that do I really think that is a what you want to plan for no of course not because it it'll probably damage the company and the stock a lot more uh but do I think that that happening is enough to say oh Tesla's a Bad Company should invest in Tesla no not at all absolutely not but I do think that elon's behavior against Regulators has unfortunately attracted this negative attention generally I'm of the mindset where uh I i' you know love to be able to be as as uh as as Cooperative as possible to say Hey you know if if let's say the SEC says Hey Kevin you know we have a problem with this how can we fix it and so there are always going to be cases where you're going to have to pay fines uh for things that just aren't perfect as they should be but I think you enhance or worsen that when you purposefully try to spite The Regulators and then you kind of give them the ammunition to come after you so I think a little bit this is um unfortunately Elon soaking regulatory attention to him when he shouldn't be soaking and and I'm not talking about the Mormon soaking either this is like maybe we should use the word magnet magnetically attracting this sort of negative attention I think uh trying to be a little bit more um how should I say uh Cooperative might go a long way anyway who knows this is just my thought my speculation a lot of folks were asking me about this so here it is do I really think a wire charge at the end of the day is going to be a big deal again doesn't look good it'll take years to actually litigate the point is I think uh I think this is a very similar to a get Trump uh situation unfortunately can not advertise these things that you told us here I feel like nobody else knows about this we'll we'll try a little advertising and see how it goes congratulations man you have done so much people love you people look up to you Kevin P there financial analyst and YouTuber meet Kevin always great to get your take even though I'm a licensed financial adviser licensed real estate broker and becoming a stock broker this video is not personalized advice for you it is not tax legal or otherwise personalized advice tailor to you this video provides generalized perspective information and commentary any third-party content I show shall not be deemed endorsed by me this video is not and shall never be deemed reasonably sufficient information for the purposes of evaluating a security or investment decision any links or promoted products are either paid affiliations or products or Services we may benefit from I also personally operate an actively managed ETF I may personally hold or otherwise hold long or short positions in various Securities potentially including those mentioned in this video however I have no relationship to any issuer other than house act nor am I presently acting as a market maker make sure if you're considering investing in house Haack to always read the PPM at house.com

Channel: Meet Kevin

Views: 46,356

Keywords: tesla, fraud, wire fraud

Id: Ll5WO6276mQ

Length: 16min 35sec (995 seconds)

Published: Wed May 08 2024