Tesla has $1.4 billion that seems to have gone astray, potentially raising questions about the company's controls [View all]

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https://fortune.com/2025/03/23/tesla-billion-gone-astray-questions-controls/

Tesla has $1.4 billion that seems to have gone astray, potentially raising questions about the company’s controls
BY Greg McKenna
March 23, 2025 at 6:13 AM CDT

Elon Musk’s vision to usher in a utopia powered by Tesla robotaxis and the company’s humanoid robot, Optimus, will likely take significant cash. Tesla spent $6.3 billion in capex during the second half of last year, but the gross value of the company’s relevant assets only increased by $4.9 billion. Those numbers should tally for domestic companies without any major asset sales or impairments, but other factors could be at play for Tesla.

Tesla is making big bets on AI, but investors might have a reason to question where the money is going. If left unexplained, a $1.4 billion discrepancy between the firm’s capital expenditures and the valuation of the assets that cash was spent on, first reported by the Financial Times, could spark concerns about internal controls at Elon Musk’s electric vehicle giant.

Several accounting experts, however, say there are plausible justifications for the variance that might not show up on Tesla’s financial statements. You would expect the relevant numbers to add up for a domestic company with no big asset sales or impairments, said Tim Morrison, an accounting professor at Notre Dame and former audit partner at Ernst & Young. Tesla, of course, sells cars around the world and has factories on three continents. PwC has audited Tesla’s financial statements since 2005.

“If they had the numbers incorrect, then that would be a red flag related to controls,” said Morrison, who worked primarily with multinational manufacturing companies and led internal inspections to assess audit quality at EY.

This isn’t the first time Tesla’s accounting practices have been questioned, noted Garrett Nelson, a vice president and senior equity analyst at CFRA Research.

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