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While explaining its latest SEC subpoena, Tesla also said prevailing circumstances have necessitated a hike in capital spending.
In Tesla’s (NASDAQ: TSLA) recent 10-Q filing, the company revealed plans to increase spending, and also mentioned that it received a second subpoena in relation to Elon Musk’s 2018 go-private tweets. In its filing with the Securities and Exchange Commission (SEC) the electric vehicle maker now expects to spend up to $8 billion in 2022. Furthermore, Tesla stated that this higher spending capital expenditure, up from a cap of $7 billion, will also occur in each of the next two years.
Expenses will go towards equipment procurement, construction, and other large ticket items throughout the designated period. Tesla is doing this to ramp up production at its new facilities in Texas and Berlin.
Musk had stated last month that both factories were losing billions of dollars while struggling to increase output. At the time, the Tesla chief executive officer said:
“Both Berlin and Austin factories are gigantic money furnaces right now. Okay? It’s really like a giant roaring sound, which is the sound of money on fire.”
Much of the issues hampering operations at both production plants are a shortage in battery supply and China port issues.
Spending Outlook Aside, Tesla Provides Insight into Second Subpoena
In addition to providing an update on its capital spending outlook, Tesla also explained the SEC’s latest subpoena. According to the company, the Commission served the subpoena to obtain information regarding compliance with Musk’s 2018 SEC settlement terms.
The subpoena is Tesla’s second from the SEC in one year. In its latest filing, Tesla explained:
“…The SEC had issued subpoenas to Tesla in connection with Elon Musk’s prior statement that he was considering taking Tesla private. The take-private investigation was resolved and closed with a settlement entered into with the SEC in September 2018 and as further clarified in April 2019 in an amendment.”
Tesla specified the two SEC subpoenas as issued on November 16, 2021, and June 13, 2022. According to the company, the regulator was “seeking information on our governance processes around compliance with the SEC settlement, as amended.”
Tesla’s settlement with the SEC entailed stripping Musk of his title as chairman of the electric vehicle manufacturer. However, the prominent businessman was allowed to stay on as CEO. Musk also made adjustments after the settlement with the SEC over tweets suggesting taking Tesla private at $420 per share. He agreed to let the company’s lawyers pre-approve tweets with material information about the company. Musk had suggested that he secured enough funding to take Tesla private. The SEC reported that although the CEO met with investors, he had not secured funding.
The first subpoena in November came just days after Musk polled his Twitter followers on whether he should sell some of his shares. The Tesla CEO vowed to honor the poll’s results, regardless of the outcome. The poll majorly suggested that he should sell 10% of his TSLA stake. Late last year, Musk ultimately did sell the shares.