Tesla’s (TSLA) accounting practices are raising red flags as a new report from the Financial Times shows that $1.4 billion is missing.
Many Tesla shorts and detractors have questioned Tesla’s accounting for years, but they have never gained much traction – until now.
Today, the Financial Times has released a new report pointing to a $1.4 billion gap in assets:
Compare Tesla’s capital expenditure in the last six months of 2024 to its valuation of the assets that money was spent on, and $1.4bn appears to have gone astray.
The article points out that Tesla reports having spent $6.3 billion on “purchases of property and equipment excluding finance leases, net of sales” in the second half of 2024, while property, plant, and equipment rose by only $4.9 billion in that period.
Accounting experts agree that, in most cases, the capex number matches closely to the increase in gross PP&E, but some factors can make a difference: sales or impairments of assets, foreign exchange, etc.
However, Tesla didn’t report any significant enough change in the usual suspects to justify the difference.
The report also points to other red flags, like Tesla claiming to sit on $37 billion in cash and yet it raised $6 billion in new debt last year.
While it’s not unusual for companies with significant cash piles to raise debts, it’s less than ideal in this current environment.
Finally, the FT report also points to Tesla not offering share buyback or dividend despite claiming a $15 billion operating cash flow last year, higher than its CAPEX. This is rare for large companies and puts Tesla in a very small club that includes other companies like Temu.
In 2022, CEO Elon Musk said that he would push for Tesla to use some of its cash for share buybacks, but it never happened.
Jacek Welc, professor of corporate finance at the SRH Berlin University of Applied Sciences, compares these red flags to recent financial scandals, like Wirecard, Longtop Financial Technologies, and NMC Health.
Electrek’s Take
I have some experience in financial accounting, having learned the basics from the excellent Brian Bushee at Wharton, but I never felt that I was knowledgeable enough to make such an accusation against Tesla.
Shady accounting at Tesla is something people have been pointing out for years, but it’s the first time I’ve seen it getting traction from a major financial outlet like the Financial Times.
This is likely going to put pressure on Tesla and its auditors.
However, for those hoping for Tesla to get in hot water for cooking the books, I would remain careful. Not only could there be explanations for this, but with Trump and Musk kneecapping the SEC, repercussions are unlikely.
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