Elon Musk, Tesla given a week to reach accord with SEC
Elon Musk has another week to work out his latest dispute with the Securities and Exchange Commission.
A federal judge Thursday granted a request by the two sides for more time to resolve a fight over whether Musk, Tesla’s chief executive, had violated an earlier settlement with the commission governing his public statements about the company’s finances.
The SEC had asked the court to hold Musk in contempt for a Twitter post Feb. 19 in which he said Tesla would produce about 500,000 cars this year. That was at variance with the company’s guidance a month earlier that the figure would be 360,000 to 400,000.
The commission asserted that the Twitter statement — which Musk later revised to conform to the earlier guidance — violated a requirement for him to get approval from a Tesla lawyer for statements that include potentially market-sensitive information.
Musk’s feud with the SEC stems from a Twitter post in August in which he claimed to have “funding secured” to take the company private at $420 a share. It was later revealed that he was referring to a much more embryonic proposal than he had implied. The SEC sued Musk and Tesla, citing securities fraud.
In a settlement of that lawsuit, Musk agreed to step down as chairman and to get a lawyer to review written communications, including posts on Twitter, in which he made material statements about the company.
At a hearing two weeks ago on the SEC’s request that Musk be held in contempt, Judge Alison J. Nathan of U.S. District Court in Manhattan told the two sides to “take a deep breath” and put on “their reasonableness pants” to settle the matter, setting Thursday as the deadline.
In a submission approved by Judge Nathan on Thursday, the adversaries said that “while we have not reached an agreement,” they had conferred by phone for more than an hour this week “and are continuing to discuss potential resolution.” They said they would report back to the court by next Thursday “indicating whether we have reached an agreement in principle.”
The talks are going on as Tesla prepares for two important public presentations next week. On Monday, the company plans to outline its efforts to develop selfdriving cars in a bid to convince Wall Street analysts that it has a competitive lead in that technology. On Wednesday, the carmaker will report its first-quarter results. Musk has said the company lost money in the quarter, after posting profits in the third and fourth quarters of 2018.
Tesla’s sales slowed sharply in the first three months of the year. The company delivered just 63,000 vehicles, a drop of 31% from the final three months of 2018. The decline seems to show that demand has softened in the United States and that the company has not been able to ramp up sales in Europe and China as quickly as it had hoped to because of logistical challenges.
In recent weeks Tesla has shifted sales strategies several times, announcing it would close most showrooms before reversing course, and cutting prices only to raise them days later. In the latest course correction, Tesla said last week that it would end online sales of the long-awaited $35,000 version of its Model 3 sedan, which it announced with great fanfare just a few weeks earlier. The company also made other changes that effectively raised the price of the car for many customers.