FT Poking Around Tesla Financial Fraud

Dan McCrum, the Financial Times reporter who brought down Wirecard, is now kicking the tires at Tesla. Musk will need the full powers of the DoJ if anyone confirms what McCrum is hinting.

• Nice to see Dan McCrum poking holes in Tesla’s dodgy financials: The Financial Times’ reporter Dan McCrum brought down Germany’s Wirecard in 2020 despite threats, harassment, and sanctions by the German authorities (nice summary in this YouTube video). He’s now suspicious of Tesla’s numbers.

• Tesla’s assets not matching cash flows: McCrum’s report in FT Alphaville (here) yesterday raised a lot of eyebrows as it showed that Tesla’s high capex doesn’t match their reported Property, Plant, & Equipment (PP&E) on their balance sheet. In my February 5th report on Tesla’s 2024 10-K (here), I highlighted this point. See Figure 1 for further analysis below.

• Tesla raised cash despite being cash-rich: He also questions why Tesla raised $5.7 billion in cash if they started the year with $29.1 billion. Tesla’s 2023 net cash/equity ratio was the auto industry’s highest at 38% and rose to 39% in 2024 (Toyota’s is only 16%). I’ve been asking this question since June 2023 from which time Tesla raised $9.7 billion in cash by issuing asset-backed securities.

• Tesla has the biggest variance between assets & cash flows: In Figure 1 below, there’s a comparison of GM and Tesla in terms of how much their stated net PP&E differs from what it should be versus what’s stated in their cash flow statements. GM is stable while Tesla has gone off the charts since they became “less financially stable” in Q4 2023.

• Red flags like Tesla don’t bode well for companies in demise: Many companies on their last leg slowly have their “skeletons in the closet” exposed as they become financially weaker. This is what’s happening at Tesla and why Musk needs Trump to pump Tesla’s cars on the South Lawn of the White House and his Commerce Secretary to pump Tesla’s stock on Fox News.

• The FT didn’t give a conclusion as they’re still digging: But I think there are suspicions that Tesla is hiding numbers in different compartments of its financials.