Tesla CEO Elon Musk loved Twitter long before he purchased it.
Musk has been a frequent poster on the social media network for years, often sharing his thoughts on everything from the mundane to the profane.
He’s also gotten himself and Tesla into trouble on the social media platform in the past.
Related: Elon Musk fulfills a promise he recently made to Tesla investors
Back on August 7, 2018, Musk tweeted, “Am considering taking Tesla private at $420. Funding secured.”
This tweet led to a class action lawsuit filed by Tesla shareholders, who claimed it was misleading. They claimed it caused them to lose money after stock prices rose nearly 23% in the subsequent days to meet the $420 level, only to decline again once it became clear Musk was not serious about taking the company private.
The plaintiffs argued that no one, not even one of the world’s wealthiest people, should be above the law, and knowingly misleading shareholders to believe you are taking a company private when you are not is illegal.
Musk’s defense, meanwhile, argued that while the “funding secured” tweet was only “technically inaccurate” and that “the whole case is built on bad word choice. Who cares about bad word choice?”
A San Francisco jury eventually ruled that Musk and Tesla were not liable for misleading investors, letting Musk off the hook after just two hours of deliberation.
Six years later, Musk once again found himself in hot water over a tweet, but this time the pressure was coming from inside his company.
Tesla promised a budget $25,000 vehicle years ago.
Image source: NurPhoto/Getty Images
Musk faces off against Tesla execs over tweet
Last year, Reuters began reporting on Tesla’s plan to discontinue plans for a $25,000 EV that would be the most affordable the company has ever built.
When it was first announced, analysts and investors expected the vehicle to be a smashing success like the Model 3, Tesla’s current budget option. But, according to three sources who talked to Reuters, Tesla held a meeting attended by scores of employees and told them of the decision not to pursue the model.
Elon Musk’s reaction to the piece was immediate.
“Reuters is lying,” Musk said on X after the story was published on April 5.
Musk’s tweet stopped a 6% slide that day, as the budget model, known as Model 2, had been the linchpin of the company’s growth plans.
Related: Elon Musk explains DOGE mission, takes shot at government
But according to new Reuters reporting, Tesla executives were confused and alarmed by the tweet because the company had, in fact, decided to abandon the Model 2. They felt Musk’s tweet could potentially make them financially liable, like his tweet in 2018 almost did.
Some senior managers were so confused by the tweet that they asked Musk whether he had changed his mind about the car. Musk assured them that the project was still off.
The company had previously said that the Model 2 would be an all-new model, built and designed from scratch, that would revamp Tesla’s entire image.
Instead, the company plans to offer slimmed-down versions of its popular Model 3 sedan and Model Y SUV. No prices have been set for those models, and their expected rollout in the first half of 2025 has been delayed.
One Tesla executive said that some other Tesla execs weren’t as concerned about the tweet because the company’s product plans remain flexible.
However, one of the biggest concerns some execs had was about the Securities and Exchange Commission.
Tesla feared Musk had run afoul of the SEC, again
While Musk was able to win the jury trial back in 2018, he could not escape the SEC.
Musk settled claims over the funding secured tweet, with the agency alleging that Musk misled investors by saying he was planning to take Tesla private.
As part of the settlement, Musk agreed to step down as chairman of Tesla, pay a $20 million fine (with Tesla also paying another $20 million), and add two new independent directors to his board. Musk also agreed to have his social media posts about Tesla be vetted by a lawyer.
Reuters reported that some of the executives questioning Musk told associates that they feared Musk’s tweet could have violated his settlement with the SEC because he was misleading investors about a future product they had already agreed to scrap.
The SEC did not immediately return a request for comment.
Related: Elon Musk says he is ‘paranoid’ about this issue; he’s right to be
