The U.S. Securities and Exchange Commission is investigating claims Tesla concealed material information about a crash that killed a man in May. The Model S driven by Joshua Brown in Florida was said to be on Autopilot, a signature feature of the Tesla brand.
The SEC is looking into the possibility that Tesla breached securities law by withholding the information from investors, and whether that information was crucial to investors, as the company pushed to raise funds to boost vehicle and battery production.
Elon Musk: It Wasn't Material
Tesla continued with a massive stock sale, raising $1.46 billion on May 18, which was 11 days after the accident.
The company said it had informed regulators nine days after the fatality, and defended its move not to publicize the incident until a federal investigation was in place. The National Highway Traffic Safety Administration (NHTSA) announced a probe on June 30.
The SEC, however, is checking whether the electric carmaker had waited too long before informing investors.
Tesla says it "has not received any communication from the SEC regarding this issue," the Wall Street Journal reports.
The accident calls into question the safety of drivers who activate the new autopilot feature that controls the steering and braking capabilities of the vehicle. The technology is present in more than 70,000 Tesla vehicles around the world.
Elon Musk, CEO of Tesla, says he didn't know of the Autopilot accident when the capital boost was taking place.
"What we told NHTSA was just that somebody died — it wasn't that there was an Autopilot incident," Musk says. "I also don't think it's material, but I didn’t know about it."
Tesla Answers Other Investor Concerns
Apart from safety issues, pressure is also mounting for Tesla on the side of its production and acquisition plans.
Earlier this month, the carmaker announced that it had missed its second quarter target for production and deliveries.
Although vehicle production increased by 20 percent from Q1, Tesla manufactured only 18,345 units and delivered 14,370, after setting a goal of 20,000 for Q2.
The vision of a more robust production line was one of the key factors that drove Tesla's recent funding boost from investors. The company is set to ramp up manufacturing and deliveries, predicting an output of 50,000 vehicles in the second half.
In June, the company also announced plans to acquire SolarCity, the solar energy company backed by Musk and his cousins Lyndon and Peter Rive, but the deal was questioned by investors over fears of cash burns and conflict of interest.
Concerns were raised over how profitable SolarCity would be, considering how the solar rooftop company has lost $283 million since the start of 2016 and continues to lose to cheaper alternatives in the market for sustainable energy.
