Category: Automotive

Tesla shares drop as much as 13% after SEC charges CEO Elon Musk with fraud

Musk could still be an important piece of Tesla, he just couldn't run the thing: Stewart
6 Hours Ago | 11:59

Shares of Tesla dropped sharply in after-hours trading Thursday after court documents showed the Securities and Exchange Commission is suing Elon Musk for fraud.

Sources close to the company told CNBC the company was also expecting to be sued, though Tesla was not named as a defendant in the complaint.

Tesla's stock dropped as much as 13 percent, to around $268, down from $307.52 as of the close.

Musk, the company's CEO, tweeted last month he was thinking about taking Tesla private, noting: “Funding secured.”

The Aug. 7 tweet sent Tesla shares flying, and they closed 11 percent higher on the day.

After sending the tweet, Musk claimed he had been in talks with the Saudi Arabian sovereign wealth fund and was confident he'd have the funding to take the company private at $420 a share. Tesla abandoned its plans to go private later in August.

“The SEC is looking at it very seriously. The stock is going to be under pressure while this gets resolved, and obviously these things take time. The SEC obviously has fired the first shot,” said Art Hogan, chief market strategist at B. Riley FBR. “It sounds like the company's first communication was to defend.”

Tesla since Aug. 7

Source: FactSet

In its complaint, the SEC said Musk knew he “had not agreed upon any terms for a going-private transaction with the Fund or any other funding source,” adding Musk had “had no further substantive communications with representatives of the Fund beyond their 30 to 45 minute meeting on July 31.”

Regardless, the stock has been a roller-coaster ride for investors ever since the infamous Aug. 7 tweet. Since popping that day, the stock has dropped 19 percent through Thursday's close.

Colin Rusch, an analyst at Oppenheimer with a buy rating and a $385 price target on Tesla, told CNBC's “Closing Bell” the stock, and the company, can recover from this.

“The potential for this platform is generating an awful lot of cash flow,” Rusch said. If “they implement some fiscal discipline around growth and increment operating margins, we do think there is still an awful lot of capital that is still very bullish on this name and will continue to buy the name even with this sort of overhang.”

— CNBC's
Patti Domm
contributed to this report.

WATCH: Munster thinks there's a 25% chance Musk remains Tesla CEO

I think there's a 25% chance Musk remains Tesla CEO: Munster
6 Hours Ago | 09:06

Tesla’s Elon Musk accused of fraud

The Securities and Exchange Commission has filed a lawsuit accusing Tesla boss Elon Musk of securities fraud. The US financial regulator says Mr Musk’s claims that he had secured funding to take the electric carmaker private were “false and misleading”. It is seeking to bar Mr Musk from acting as an officer or director of… Continue reading Tesla’s Elon Musk accused of fraud

Musk’s fraud charge will be a force for positive change at Tesla, says tech investor Munster

I think there's a 25% chance Musk remains Tesla CEO: Munster
2 Hours Ago | 09:06

The fraud charge for Tesla founder and CEO Elon Musk could spark positive change at the electric car maker, said Gene Munster, managing partner of technology-focused venture capital firm Loup Ventures.

“I think this is actually, strange as it sounds, may be a positive force for some change at the company. We've been advocating that Elon has a different role — stays at Tesla but different visionary role, non investor-related focus. I think there's an opportunity this will pave the way for some of that,” Munster said Thursday on “Closing Bell.”

Musk has been sued by the Securities and Exchange Commission for fraud, according to court documents filed Thursday. Sources close to Tesla told CNBC that the company was also expecting to be sued, though it was not named as a defendant in the complaint.

In August, Musk tweeted that he was considering taking Tesla private, adding “funding secured.” The tweet spurred a scandal-ridden fall for Tesla and sent the stock seesawing for weeks.

“This unjustified action by the SEC leaves me deeply saddened and disappointed. I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way,” Musk said Thursday in a statement.

I'm surprised shareholders are shocked Musk was charged: Citron's Left
2 Hours Ago | 03:31

Munster said there's “greater than 50 percent” chance Musk gets removed as an officer, because the SEC, “they want blood here.” Munster said it is unlikely Musk will be ousted from the company completely — a fear he said is fueling Tesla's sharp after-hours decline.

“Investors are jumping to that conclusion … that will be on investors minds' for a long time. But that is only one of four remedies for being found guilty of securities fraud, and keep in mind, he has not been found guilty,” Munster said.

Although he thinks the charge could push Musk into a position that better suits his talents for “product and vision” at Tesla, he admitted the news “plays into the difficulty that Tesla is having,” and will likely keep the company's stock “range-bound for probably the next three months.”

“The most important part is that he remains an important part of the fabric of that company … and he can do that without having a spot on their board or an investor-facing role,” Munster said.

Colin Rusch, senior analyst at Oppenheimer, agreed that there is a need for additional leadership at Tesla. He compared Tesla to Apple, which saw its stock appreciate “pretty significantly” for several years after CEO Steve Jobs left.

“We wouldn't be surprised to see Musk settle this fairly quickly,” he said on “Closing Bell.” “He probably does want to stay involved in the company in an active way and will try to do that.”

Shares of the automaker fell more than 10 percent in extended trading Thursday.

— CNBC's Sara Salinas contributed reporting.

DENSO and NRI SecureTechnologies to establish a joint venture for the automotive cybersecurity market

DENSO Corporation announced it has agreed to establish a joint venture with NRI SecureTechnologies, Ltd. to detect and diagnose the security risks of in-vehicle electronic products. The new cybersecurity company, named NDIAS, Ltd. is equally owned by DENSO and NRI and will be officially established in December 2018. NDIAS will harness DENSO’s expertise in in-vehicle… Continue reading DENSO and NRI SecureTechnologies to establish a joint venture for the automotive cybersecurity market

Name chosen for exclusive production vehicle: Hypercar to be called Mercedes-AMG ONE

28.

September 2018

Affalterbach

Affalterbach. In the run-up to the Paris Motor Show 2018, the performance and sports car brand announces the name of the future hypercar: Mercedes-AMG ONE. The name stands for the highest automotive ambition: to bring Formula 1 hybrid technology to the road. Mercedes-AMG ONE will be the pinnacle of the model portfolio and the absolute top-of-the-line model – as is logically referenced by the One. With intensive testing having been ongoing for months in England on high-performance test stands and race tracks, Mercedes-AMG now presents the latest development status of an outstanding technical feature: the active aerodynamics.
The active aerodynamics, which is currently undergoing wind tunnel testing, features a multi-part, two-stage extendable rear wing for maximum downforce in race mode. Nowhere is better knowledge of aerodynamics to be found than in the top tier – the experts at the high-performance subsidiaries in Affalterbach, Brackley and Brixworth are working across borders on just one goal: to bring racing technology to life in a street-legal vehicle.
Show truck documents the latest development status
Future Mercedes-AMG ONE customers can now obtain comprehensive information on the development progress of the vehicle. In an exclusive, mobile showroom entitled “The Future of Driving Performance”, Mercedes-AMG showcases the latest status of the hypercar, including a chance to sit in the cockpit, along with a demonstration of the individual equipment options. This is made possible by a custom-built trailer with extendable sides.
This creates a mobile customer showroom with vehicle display, coffee bar, lounge and various information elements, such as touch screen animations, material samples and colour examples. The contents are regularly updated and supplemented. The information on offer is rounded off by video documentations and interviews. The show truck is now available for the first time to Mercedes-AMG ONE customers in the grounds of the Munich Mercedes-Benz branch.

Press Contact

Birgit Zaiser

Manager Communications Mercedes-AMG

birgit.zaiser@daimler.com

Tel: +49 7144 302-581

Fax: –

Stefanie Lüssenheide

Lifestyle and Brand Communications

stefanie.luessenheide@daimler.com

Tel: +49 (0) 711 17 77369

Fax: +49 (0)711 17 79093799

Koert Groeneveld

Head of International Product & Technology Communications

koert.groeneveld@daimler.com

Tel: +49 711 17-92311

Fax: +49 711 17-94365

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These can be used to show content from a related smartphone app. “The Forease embodies a refreshingly simple form of driving fun in the city, standing for urban electric mobility without compromise,” said new Smart boss Kartin Adt. The EV powertrain is a nod to the future direction of Smart, which will become an electric-only… Continue reading Smart Forease concept revealed

Tesla Autopilot on Version 9: Mad Max mode, path planning, navigate, and more

In our latest look at the new firmware, we’re now exploring how Tesla Autopilot on Version 9 works: anything from Mad Max mode to path planning and more. We have already gotten interesting looks at the new version 9 firmware user interface on Model 3 and on Model S. Now we’re looking at Tesla Autopilot… Continue reading Tesla Autopilot on Version 9: Mad Max mode, path planning, navigate, and more

SEC charges Tesla CEO Elon Musk with fraud

Kiichiro Sato | AP
Tesla CEO and founder of the Boring Company Elon Musk.

Tesla CEO Elon Musk has been sued by the Securities and Exchange Commission for fraud, according to court documents filed Thursday. Sources close to the company told CNBC the company was also expecting to be sued, though Tesla was not named as a defendant in the complaint.

Shares of the automaker fell roughly 10 percent in extended trading Thursday.

The SEC complaint alleges that Musk issued “false and misleading” statements and failed to properly notify regulators of material company events. The SEC plans to hold a press conference at 5 pm E.T.

In August, Musk tweeted that he was considering taking Tesla private, adding “funding secured.” The tweet spurred a scandal-ridden fall for Tesla and sent the stock see-sawing for weeks.

Musk later explained that he had been in discussions with the Saudi Arabian sovereign wealth fund and felt confident the funding would come through at his proposed price of $420 per share.

The SEC, in its complaint, alleged:

Musk knew that he (1) had not agreed upon any terms for a going-private transaction with the Fund or any other funding source; (2) had no further substantive communications with representatives of the Fund beyond their 30 to 45 minute meeting on July 31; (3) had never discussed a going-private transaction at a share price of $420 with any potential funding source; (4) had not contacted any additional potential strategic investors to assess their interest in participating in a going-private transaction; (5) had not contacted existing Tesla shareholders to assess their interest in remaining invested in Tesla as a private company; (6) had not formally retained any legal or financial advisors to assist with a going-private transaction; (7) had not determined whether retail investors could remain invested in Tesla as a private company; (8) had not determined whether there were restrictions on illiquid holdings by Tesla's institutional investors; and (9) had not determined what regulatory approvals would be required or whether they could be satisfied.

Musk said in an interview with The New York Times that he calculated a take-private price of $420 by rounding $1 up from what would have been a 20 percent upside at the time.

“According to Musk, he calculated the $420 price per share based on a 20% premium over that day's closing share price because he thought 20% was a 'standard premium' in going-private transaction,” the SEC alleged in its suit. “This calculation resulted in a price of $419, and Musk stated that he rounded the price up to $420 because he had recently learned about the number's significance in marijuana culture and thought his girlfriend 'would find it funny, which admittedly is not a great reason to pick a price.'”

In the hours after the initial tweet, Musk doubled down on the proposal in subsequent tweets. The SEC cited those subsequent tweets in the complaint as additional misleading statements.

Musk also failed to properly notify regulators about his plans to take the company private, the complaint alleges.

Tesla's board of directors initially formed a special committee to evaluate the take-private proposal, but Musk ultimately called off the privatization plans on Aug. 24.

Tesla did not immediately respond to request for comment.

Read the lawsuit as filed in the Manhattan District Court below, and download the file here:

This is breaking news. Please check back for updates.

—CNBC's
David Faber
contributed to this report.