Federal prosecutors have initiated an investigation into Tesla’s performance claims following a Reuters report that highlighted potential exaggeration of driving distances by the electric carmaker. The Wall Street Journal reported on Wednesday that the investigation centers on allegations that Tesla misrepresented the driving range of its vehicles.
Exaggerated Range Estimates
In a July report, Reuters revealed that Tesla vehicles often fall short of achieving the advertised range estimates, as well as projections displayed by the cars’ own equipment. Experts who tested and studied the vehicles confirmed these discrepancies. The report also stated that Tesla had developed algorithms around ten years ago to generate optimistic in-dash driving range estimates, which led to customers expecting better performance than what was delivered. The company established a “Diversion Team” to handle the influx of service appointments stemming from customer dissatisfaction with range-related issues.
Inundated Service Centers
Due to the surge in appointments at its service centers, Tesla implemented the Diversion Team, specifically based in Austin, Texas. This team aimed to address the concerns of customers who were disappointed by the difference between the advertised range and the actual performance of their vehicles. Multiple individuals with knowledge of the matter confirmed the existence of the Diversion Team.
Multiple Ongoing Probes
Tesla is currently facing various investigations, including scrutiny from federal auto safety regulators examining its Autopilot driver assistance technology. The U.S. Attorney’s office in Manhattan is also reportedly investigating the use of company funds on a secretive project known internally as a house for CEO Elon Musk. The nature and purpose of this project remain undisclosed. The Securities and Exchange Commission (SEC) has opened a civil probe as well, focused on undisclosed aspects. The investigations are in their preliminary stages and may not necessarily result in charges.
Focus on Musk and Misuse of Resources
The investigation into the house project is reportedly centered on determining whether Elon Musk personally benefited from the project and assessing the amount of company resources expended on it. No specific financial details have been disclosed in connection to the project. The house is situated near Austin, Texas. It was previously reported in July that Tesla’s board members were investigating potential misuse of company resources for the project.
Early Stages and Uncertain Outcomes
The ongoing investigations into Tesla’s practices and performance claims are in their early phases and there’s no guarantee of formal charges resulting from them. The focus remains on understanding the accuracy of the driving range estimates, as well as scrutinizing Musk’s potential personal benefits from the undisclosed house project.