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Tesla (TSLA) accounting raises red flags as report shows $1.4 billion missing

Tesla (TSLA) accounting raises red flags as report shows $1.4 billion missing

  • 19.03.2025 18:09
  • electrek.co
  • Keywords: Accounting Scandal

Tesla's accounting practices are under scrutiny after a Financial Times report revealed a $1.4 billion discrepancy in its capital expenditures. The report highlights that Tesla spent $6.3 billion on property and equipment but only showed a $4.9 billion increase, raising concerns about potential misreporting.

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The article discusses a potential accounting scandal at Tesla, highlighting missing $1.4 billion and other red flags.

Context

Analysis of Tesla (TSLA) Accounting Issues

Key Facts and Data Points

  • Financial Times Report: Highlights a $1.4 billion discrepancy in Tesla's accounting practices.

    • Capital Expenditure vs PP&E Increase:
      • Tesla reported spending $6.3 billion on "purchases of property and equipment excluding finance leases, net of sales" in the second half of 2024.
      • Property, plant, and equipment (PP&E) increased by only $4.9 billion, leaving a $1.4 billion gap.

  • Lack of Justification:

    • No significant changes in factors such as asset sales, impairments, or foreign exchange to explain the discrepancy.

  • Cash and Debt Position:

    • Tesla claims to hold $37 billion in cash.
    • Despite this, it raised $6 billion in new debt last year.

  • No Buybacks/Dividends:

    • Tesla reported a $15 billion operating cash flow last year, higher than its capital expenditure.
    • No share buybacks or dividends were offered.

Market Trends and Business Impact

  • Accounting Concerns: The $1.4 billion gap raises serious questions about Tesla's accounting practices, potentially impacting investor confidence.
  • Competitive Dynamics: While competitors may not directly be affected, the scrutiny on Tesla could shift focus to its financial health compared to others in the EV sector.

Strategic Considerations

  • Investor Sentiment: The report may pressure Tesla and its auditors, with investors likely seeking clearer explanations or actions from the company.
  • Regulatory Environment: Concerns about potential SEC leniency under current leadership (e.g., figures like Elon Musk and Donald Trump) could influence how these issues are addressed.

Long-Term Effects

  • Reputational Risk: If unresolved, this could harm Tesla's reputation, affecting its ability to attract talent and maintain market share.
  • Financial Scrutiny: Increased scrutiny from regulators and investors may lead to more stringent financial reporting requirements in the future.

Expert Opinions

  • Professor Jacek Welc: Compares these red flags to past scandals (e.g., Wirecard, NMC Health), suggesting potential systemic issues within Tesla's accounting practices.

This analysis highlights critical business insights and market implications stemming from Tesla's accounting discrepancies, emphasizing the need for transparency and addressing investor concerns promptly.