“WE ARE about to have the most amazing quarter in our history.” So declared Elon Musk in an email on September 7th to employees of Tesla, his electric-vehicle (EV) firm. This cheery promise came on the heels of self-inflicted blows, most obviously when Mr Musk tweeted carelessly that he had “funding secured” to take the company private, prompting a spike in its share price.
Trouble is looming on several fronts. On September 18th Tesla confirmed that America’s Department of Justice (DoJ) has asked for documents relating to the problematic tweet. Mr Musk later jettisoned the plan to go private (while still maintaining that the funding to do so had been available). The DoJ’s interest comes on top of a civil investigation by the Securities and Exchange Commission into the tweet and into the company’s claims about sales and manufacturing targets. But Urska Velikonja of Georgetown Law School says the DoJ’s involvement is a significant escalation because it raises the spectre of criminal charges. Even if Mr Musk is found innocent, a lengthy probe could make it harder for Tesla to raise more capital.
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A spate of lawsuits is another headache. Andrew Left of Citron Research is suing Tesla, claiming that Mr Musk released false information about going private in order to “burn” short-sellers who had bet that shares would fall. Class-action lawsuits claiming massive damages to shareholders resulting from the troublesome tweet have also been filed.
Competition is hotting up, too. Saudi Arabia’s sovereign-wealth fund, which holds a $2bn stake in Tesla, this week announced it would invest over $1bn in Lucid Motors, a Californian EV rival. Nio, a promising Chinese EV startup, raised $1bn this month through a flotation on the New York Stock Exchange. And on September 17th Audi unveiled the e-tron, an electric sports-utility vehicle.
If Tesla is to survive the onslaught, it must overcome its manufacturing snags and scale up production fast. Mr Musk tweeted this week that his firm has made progress, going from “production hell” to “delivery logistics hell”. He vows it will become “sustainably profitable” this quarter. That would be amazing indeed.