Written by Cláudio Afonso | LinkedIn | X
Financial Times issued a correction on Tuesday to an earlier FT Alphaville column that suggested a $1.4 billion discrepancy in Tesla 2024 capital expenditures could indicate irregularities in the EV maker’s financial reporting.
In a follow-up published Tuesday, the outlet acknowledged that “Tesla’s balance-sheet mismatch may have a benign explanation,” citing a closer examination of non-cash items and asset disposals.
The original piece, published on March 19, scrutinized Tesla’s financial statements, pointing to an apparent shortfall between the $6.3 billion the company reported in capital investments during the second half of 2024 and a $4.9 billion increase in the gross value of its property, plant, and equipment over the same period.
“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 writers Dan McCrum and Stephen Morris wrote at the time.
In the follow-up, McCrum clarified that elements disclosed lower in Tesla’s cash flow statement help reconcile much of the difference. Specifically, he pointed to Tesla’s reported non-cash investing activity, which includes purchases of property and equipment financed through liabilities.
“The line, explained in moderately simple terms here, represents the balance of property plant and equipment purchased on credit,” the follow-up article stated. “During the six months in question, Tesla paid down $689mn of those liabilities, shrinking the apparent gap to $733mn.”
Further narrowing the shortfall, the column estimated that Tesla disposed of roughly $270 million in fully or partially depreciated assets—transactions that would reduce the gross value of property and equipment on the balance sheet without necessarily signaling any financial misconduct.
“The crack we’re left with at Tesla is now small enough—just under half a billion dollars—to be filled with some combination of foreign exchange movements, non-material asset write-offs, or the sale of machinery or equipment close to its not-fully depreciated value,” the FT columnist wrote.
“As we sound the Alphaville bugle while lowering this particular red flag, one unavoidable conclusion is that at a certain point it’s necessary to trust the auditor’s judgment,” McCrum added.
While the original article described the situation as “unusual by [Tesla’s] own standards” and warned that the combination of strong reported cash flow with continued debt issuance could be “another red flag,” the correction dialed back those concerns significantly.
Elon Musk Reaction
Tesla’s chief executive Elon Musk reacted to the correction on X stating, “The “Financial” Times can’t do finance math.” On early Wednesday, Musk returned to the topic and wrote on X, “Turns out FT can’t do finance.”
Tesla’s total market share in Europe fell to 1.8% in February (down from 2.8%) and the BEV market share to 10.3% (down from 21.6%) with about 16,900 units sold.
It sold fewer than 17,000 cars in the European Union, Britain and European Free Trade Association countries as it continues ramping up production of the world’s best-selling car, the Model Y.
Earlier this week, Piper Sandler analyst Alexander Potter reaffirmed the firm’s $450 price target, suggesting an upside of over 80%.
Tesla said earlier this week that it is reworking its Full Self-Driving (FSD) software in China to comply with updated regulatory requirements, temporarily pausing a planned one-month trial that began on March 17.
