Published on June 30th, 2019 | by Johnna Crider0
The Real Fraud In The Auto Industry — No, It’s Not A Tweet
June 30th, 2019 by Johnna Crider
According to Merriam-Webster, the definition of fraud is an “intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right.”
Looks like the whole senior management team at Volkswagen is being indicted individually for fraud and corruption. It amazes me people have the nerve to call Tesla a fraud when its the ICE car makers indicted and going to jail! $TSLA https://t.co/Hl89eEJGvN
— Ross Gerber (@GerberKawasaki) April 16, 2019
To recap what Ross is tweeting about, the ex-CEO of VW, Martin Winterkorn, was recently charged with fraud in Germany.
In addition, the US Department of Justice unsealed an indictment that charged Winterkorn with conspiracy and wire fraud in connection with VW’s scheme to cheat US diesel vehicle emissions testing.
In the European Union Commission press release, Commissioner Vestager stated,
“We are concerned that this is what happened in this case and that Daimler, VW and BMW may have broken EU competition rules. As a result, European consumers may have been denied the opportunity to buy cars with the best available technology.”
Tweeting Company Info vs. Fraud
Earlier this year, Elon Musk tweeted that “Tesla made 0 cars in 2011, but will make around 500K in 2019,” from his personal account. The statement was a bit inaccurate, so he corrected it a little while later, indicating that he was referring to production rate (not total production). The correction lined up perfectly with previously disclosed forecasts. Both tweets were made “after hours” (while trading was closed).
Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.
— Elon Musk (@elonmusk) February 20, 2019
Nonetheless, this small highlight comparing 2011 to 2019 triggered the SEC, which accused him of violating their previous settlement. In other words, they were mad because he didn’t have their permission to tweet an already public fact, or make a slight error in wording after hours and correct it a little while later.
Also, on the Q4 2018 Tesla earnings call, note that it was publicly stated that Model 3 deliveries for 2019 were expected to be between 350,000 and 500,000.
The initial SEC charge was over a tweet about potentially bringing Tesla private at $420 if shareholders agreed. The SEC accused Elon Musk of fraud for that, mostly because he indicated funding was secured. Some lawyers in this space have said that as long as Elon had an implicit commitment from wealthy interests — in this case some of the super wealthy from Saudi Arabia — to do so, that was enough. (Elon indicated that commitment was implied by them repeatedly pushing him to take Tesla private with their support, but the clear hope was for most of the existing shareholders to simply fund the going private effort.) However, you don’t get into a long legal battle with the SEC (talk about a PR and stock nightmare), so Elon and Tesla settled. We don’t really know how the case would have ended in court.
There is well known Tesla [TSLA] stock manipulation going on every day, however, that gets no attention from the SEC. How many CNBC shows and articles are based on misleading info from Tesla short sellers and how often does that cause the stock to tank?
Many of these shorts have also gone on to verbally attack Elon’s mother and harass many Tesla owners, fans, and shareholders. One account is also targeting new Tesla owners with spam trying to smear Tesla.
Hey @Tesla & @SEC_Enforcement & @jack & @cleantechnica & @InsideEVs ,
how can we get this spammer and $TSLA short seller @scot_work stop harassing new Tesla owners? Seems to be using different messages to avoid automatic spam recognition. These are all from June: pic.twitter.com/b84RlcTE49
— The Short Shorts Historian (@TeslaHistorian) June 29, 2019
Back to Ross’s point: Tweeting company information is not fraud. Conspiring to sell vehicles that produce illegal amounts of pollution is.
We should be more concerned about those who seek to destroy human health and human livability on this planet by conning consumers than potentially imperfect Twitter updates from Elon Musk. There has been fraud in the auto industry — for many years. There has been purposeful fraud to push illegal amounts of pollution on people without them knowing it. Yes, auto execs have been jailed for it, because this was real fraud.
Instead of getting upset over potentially imprecise language, how about we support a company that is advocating our acceleration to sustainable energy? This is exactly what Tesla is doing, and very successfully. So far, Tesla has prevented over 3 million tons of CO2 from being put into the air thanks to its vehicles not putting out any toxic exhaust.
Imagine all those millions of cars putting out exhaust daily. Think about the buses, semi trucks, and passenger vehicles. Then imagine if they were all Teslas or other type of electric vehicles (probably inspired by Teslas). It seems illogical that we should settle for so much pollution in this day and age, but even as we do, we’ve had to suffer the fraud of auto company CEOs who thought it was fine to cheat the system, cheat the law, and cheat consumers to put out even more pollution. Sometimes, a little bit of perspective can go a long way.