Tesla (TSLA) Accounting Fraud Allegations Not True… Apology for Erroneous Report

On the 19th, the Financial Times (FT) raised issues with Tesla’s accounting, sparking controversy.

On the 20th, a day after the article was published, Musk convened an unscheduled all-hands meeting and urged employees to "hold on to your stock," but he has yet to issue any formal statement addressing the FT’s allegations.

During the Supermicro accounting fraud controversy, the stock only began to plunge after Hindenburg Research, which had raised the allegations, published its report and Super Micro Computer announced it would delay filing its annual financial statements. This reminds us that mere allegations alone do not easily drive a stock price down.

However, once suspicions start to be backed by evidence, they can snowball rapidly, and their impact is far from small—something no investor can afford to ignore.

Is this really nothing to worry about?
The FT’s criticisms fall into two main buckets.

According to the FT’s reporting, "Tesla spent $6.3 billion on capital expenditures in the second half of 2024, yet the value of assets on its balance sheet increased by only $4.9 billion," raising questions about what happened to the remaining $1.4 billion.

The capex Tesla spent should have been reflected as an increase in assets on the balance sheet, but it was not.
In general, capital expenditure figures should closely track the total increase in PP&E, though certain factors—such as asset sales, impairments, and foreign-exchange effects—can create differences.

For example, if assets were sold and the transaction was not properly recorded, the increase in assets would shrink, creating such a gap. Newly acquired assets may also lose value over time and incur impairment losses, or figures may diverge if contracts are initially signed in another country’s currency and exchange-rate movements change the actual amount paid at settlement.

The FT points out that Tesla did not report any material changes in these areas that would justify a discrepancy of this magnitude.

The FT goes on to note that Tesla claims to hold $37 billion in cash, yet still raised $2.6 billion in new funding in 2023 and $3.9 billion in 2024.
It is not as if the company is raising capital because its cash flow is weak.
Despite claiming $15 billion in operating cash flow last year, Tesla has neither conducted share buybacks nor paid dividends.

In fact, back in 2022, Elon Musk said Tesla would use some of its cash for share buybacks, but he did not follow through. On X (formerly Twitter), when asked by a shareholder, he replied, "This is up to the Tesla board," effectively shifting responsibility by saying the decision rests with Tesla’s board.

In other words, it looks odd that Tesla is sitting on a lot of cash, has no obvious use for it, and yet is trying to raise additional capital.

As time passed, on the 25th the FT published a new article that begins with the phrase "Mea Culpa"—"my fault"—as a kind of admission.

What the article is essentially saying is this:

If you combine these two adjustments, the initial $1.4bn discrepancy the FT highlighted shrinks to about $463mn, and the remaining gap is small enough to be explained by foreign-exchange movements, minor asset write-downs, or sales of assets that had not been fully depreciated.

That said, the FT added that "questions remain as to why a cash-rich company has issued new debt over the past two years, and what the trajectory of its cash balance will look like if vehicle sales continue to decline sharply," indicating that it is sticking to its original skepticism over Tesla’s recent fundraising.

It is not particularly unusual for a company with ample cash on hand to raise additional capital. Even outside of Tesla, many companies that already hold substantial cash reserves still tap debt markets when needed to raise capital.
This can be a way to fine-tune their capital structure—for example, by securing external funding while preserving cash balances—or to lock in financing ahead of time if they view the current interest-rate environment as attractive.

In the end, the issues the FT points to do not seem like particularly alarming risks.
What we should focus on instead is where we draw the line on what counts as an acceptable strategic choice.

Elon Musk and Tesla have always been at the center of public attention.
It is almost a fate they cannot escape. To Tesla’s critics, their actions look like tricks; to Tesla’s defenders, they look like strategy.

The video above, for example, questions whether Tesla’s surge in sales is really credible.
It claims that "as Canada’s EV subsidy program approached its deadline, a total of 8,600 vehicles were sold over just 72 hours on January 13 across four Tesla stores in Canada, triggering subsidy claims of about $43mn," and raises the possibility that someone may have gamed the system or exploited inside information.

Regardless of whether that specific case involved manipulation, Tesla has routinely relied on additional sales pushes and special promotions beyond normal day-to-day sales at the end of each quarter. You could interpret this as a way to hit short-term targets, but it can also be read as a warning sign that underlying organic demand may be weaker than it appears.

On top of that, Tesla

Let me ask you again. How far do you think we can go and still call it strategy?