Tesla Inc. CEO Elon Musk and the Securities and Exchange Commission (SEC) were on Thursday ordered to settle their differences over the next two weeks by U.S. District Judge Alison Nathan. The judge told the Silicon Valley billionaire and the securities regulator to use the two weeks to talk and elucidate parts of a settlement that both reached last year.
The SEC had asked the judge to hold the Tesla founder in contempt of court following his Feb. 19 tweet in which he claimed that the electric-car maker would deliver 500,000 vehicles in 2019. The terms of the 2018 agreement resulted in Musk stepping down as Tesla’s chairman.
Musk and Tesla also agreed to pay $40 million in penalties. On top of that, the California-based company was asked to put in place extra procedures and controls to oversee Musk’s social media posts about Tesla.
But in an apparent breach of the agreement, the 47-year-old entrepreneur tweeted on Feb. 19 saying: “Tesla made 0 cars in 2011, but will make around 500k in 2019.” A few hours later, he corrected himself saying: “Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.”
SEC officials said the earlier tweet contrasted with the guidance Tesla issued provided on Jan. 30 that it would deliver roughly 400,000 vehicles in 2019. The agency also argued that Musk was supposed to have his social media posts about the company pre-approved by designated in-house lawyers based on the 2018 agreement. But Musk’s lawyers disputed review and approval was part of that agreement.
Judge Nathan said she had “serious concerns that no matter what [she] decide here, this issue won’t be resolved.” “Take a breath,” said judge Nathan. “Come back with your reasonableness pants on.” In brief comments outside the New York court, Musk said: “I’m very happy with the result and I’m impressed with Judge Nathan’s analysis.”
Separately, shares of Tesla lost $24.03, or 8.23% to close the regular session at $267.78 after automaker reported downbeat new-vehicle deliveries for Q1 2019. Tesla blamed problems with shipments to China and Europe and China, adding that it expects first quarter earnings to be negatively impacted.
The company delivered 63,000 vehicles in the three months to March, down from 90,666 in the three months to December 2018. Analysts surveyed by FactSet were expecting Tesla to deliver 76,000 vehicles between January and March.
Total deliveries included 12,100 luxury Model X SUVs and Model S sedans, and 50,900 Model 3 sedans, according to a statement issued by the company. Tesla is currently building a factory in China that will allow it to cut shipment costs of its lowest-priced car – the Model 3.