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Tesla received requests for specific information and subpoenas from the US Department of Justice (DoJ) on Monday, a year after the government department launched a criminal investigation into the carmaker. Shares of Tesla (NASDAQ: $TSLA) dipped to $202.82 at market open and have since recovered and stand at $214.
The US DoJ issued subpoenas to Tesla on Monday as part of its probe into the carmaker’s driver assistance system, vehicle driving range, and several other issues. According to Tesla’s regulatory filing, the company received requests for information and subpoenas from the federal executive department.
The requested information includes documents related to the Autopilot system and Full Self-Driving (FSD) features, as well as other information “associated with personal benefits, related parties, vehicle range, and personnel decisions.”
The latest move by DoJ comes roughly a year after reports emerged that the government department initiated a criminal investigation into the world’s biggest automaker over claims that its electric vehicles can drive themselves.
In August, the Wall Street Journal reported that federal prosecutors were also scrutinizing Tesla’s vehicle performance claims and its use of funds on a secret project internally described as a house for CEO Elon Musk. In the meantime, the National Highway Traffic Safety Administration (NHTSA) has been investigating Tesla’s Autopilot for over two years after identifying more than a dozen crashes in which the company’s EVs hit stationary emergency cars.
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The subpoenas the DoJ issued to Tesla today mark another potential headwind for the EV giant following a disappointing Q3 report last week.
The carmaker’s results missed estimates across the board. Tesla reported adjusted earnings per share (EPS) of 66 cents in Q3, while analysts were looking for 73 cents. The carmaker raked in $23.35 billion in revenue during the three months, missing the consensus estimate of $24.1 billion. Total operating margin – a closely-watched profitability gauge – stood at 7.6%, significantly lower than the 17.2% in the year-ago quarter.
The report, which marked the first time Tesla reported worse-than-expected EPS and revenue since 2019, highlighted the impact of the company’s aggressive price cuts on its profitability. Earlier in the year, Elon Musk said it “makes sense to sacrifice margins in favor of making more vehicles,” signaling that the carmaker’s profits will likely remain under pressure.
Do you think Tesla’s pressured margins are only a temporary blip or an indicator of a long-term challenge for the auto giant? Let us know in the comments below.