Published on March 25, 2019 |
by Zachary Shahan
March 25, 2019 by Zachary Shahan
Full Disclosure: I am a shareholder of Tesla and I did not feel misled by Tesla's statements regarding the production of Model 3; I did not think that a class action against Tesla on this subject would make sense.
Apparently, a judge has now concluded the same thing (for the second time) on this case. US District Judge Charles Breyer of the Northern District of California concluded that the plaintiffs had essentially ignored the "repeated warnings about the risks of producing Model 3" and that it was not Tesla's fault. if they had felt misled.
Aside from the usual legal terms used by Tesla, like other companies, with respect to the "forward-looking statements", my opinion is that Elon Musk is generally extremely clear on the risks related to production. With regard to the Model 3 production ramp, he explained on many occasions that even an unforeseen problem of supply or a production problem could slow down the process as a whole, that it was very unpredictable and that he was taking time. Some critics are annoyed by the way Musk will explain these things in a basic way, but I think it's important to inform normal people (who may not be very knowledgeable about the manufacturing sector but who may have be invested in Tesla) significant risks to the company. production and sales forecasts. The classic forward-looking statements are not enough if you want people to be really careful.
In addition, Musk has repeatedly used the term "hell of production", including many times within the time allowed to applicants. If it was not a very good indication that problems might arise, I do not know what terminology could have been better. And note that it was after a production ramp of Model X in which Tesla went through "the hell of production" and had trouble getting correct production forecasts for several months.
Judge Breyer also referred to Musk's use of the term "production hell" and came to the same conclusions. Whether the judge followed all of Tesla's warnings and cautions in real time or not, returning to these warnings certainly made the conclusion of this case extremely clear.
Of course, losing money on the stock market is not pleasant, and the Model 3 boom was difficult for investors. It was also an extremely difficult time for Tesla and Elon Musk said it was the most difficult of his career. Hell of production indeed. In any event, you must ignore Musk's comments on this point completely to believe that he knowingly misled investors about how quickly Tesla could produce 5,000 cars a week.
Tesla has finally broken many production and sales records with Model 3, and does so almost every week to this day. There is no other consumer electric vehicle at this level in the world, and I'm not sure that a car manufacturer in history has ever increased its overall output as quickly as Tesla. Whether or not you think that Elon Musk and Tesla were too ambitious with their production goals, if you look at the growth of their quarterly sales, it's amazing and almost unbelievable to realize what they've done so quickly. Woe to us who thought Tesla might have broken even bigger records – I count myself among them, even though I'm impressed by what Tesla has accomplished.
I suppose this second rejection from the judge means that this lawsuit is a toast. However, if something new and important emerges from this story, we will probably come back to it.
By observing so many blatant attempts at defamation of Tesla, lowering the price of its stock and negative coverage of the clean energy society and electric vehicles, it is tempting to think that this lawsuit was part of it all, but it may not be – we actually do not know. These investors may be completely disconnected from these efforts and simply feel misled by Tesla's production forecasts / targets. This reminds however that the company's statements on the hotplates, such as the following, have significance and must be taken into account:
"This communication contains forward-looking statements that involve risks and uncertainties. These forward-looking statements are based on current expectations, estimates and forecasts, as well as on the opinions and assumptions of Tesla's management, and are subject to risks and uncertainties that are difficult to predict. There are many factors that could cause actual results to differ materially from those anticipated, including: the risks and uncertainties described in this document and those described in the sections entitled "Risk Factors" and "Management Discussion & Analysis". financial situation and results of operations ". of the annual report on Tesla Form 10-K for the fiscal year ended December 31, 2018, subsequent reports on the Form 8-K, Schedule A relating to the offer and d & # 39; other documents filed by Tesla with the SEC. We may not realize the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. We assume no obligation to update the forward-looking statements. "