LA Times continues attack on Tesla using boilerplate risk disclosure as ‘admitting huge risk’ for the Model 3


Tesla and the LA Times have an interesting history, mainly revolving around a suspicious article from last year that misleadingly asserted that Elon Musk’s companies, especially Tesla, received $4.9 billion in subsidies. Last week, Musk revealed that he believes the article originated from the fossil fuel industry and was planted in the LA Times as a strategy to counter the IMF study that found that the fossil fuel industry was receiving the equivalent of ~$5 trillion in subsidy a year.

Now the LA Times fights back this week with a new hit piece on Tesla called “Tesla throws cold water on its own hype by admitting huge risks in building the Model 3“. The article used boilerplate risk disclosure statements from Tesla’s latest SEC filing to assert that the company is “admitting huge risk” for the Model 3 production ramp up.

Risk disclosure is something you’ll find in almost every quarterly or annual report of any publicly traded company like Tesla. It simply outlines to investors what the company sees as potential risks that could prevent them from executing their business plan.

Tesla has always published its risk factors in its SEC filings. More often than not, they are almost exactly the same every quarter, but this week’s quarterly filing was a little updated to include risks associated with Tesla’s newly announced Model 3 production plan.

We even reported on the added statement yesterday since it clearly outlined the events that need to happen in order for Tesla to achieve its production ramp up for the Model 3. But the LA Times, or more specifically its columnist Michael Hiltzik, saw an opportunity for a hit piece in the same vein as the publication’s article about Tesla receiving subsidies.

The article’s headline asserts that Tesla is “admitting huge risk” and it then supports this claim with obvious boilerplate statements like:

“We may experience delays in realizing our projected timelines and cost and volume targets for the production, launch and ramp of our Model 3 vehicle.”


“the model is subject to “unanticipated deviations from the expected price point, vehicle features or performance characteristics.”

These are statements you would find in any risk disclosure section of any company about to launch a new product.

The LA Times itself indirectly issues similar statements all the time. The publication is owned by Tribune Publishing, which is publicly traded on the New York Stock Exchange and therefore is required to file financial reports and to disclose potential risks.

Their latest financial report includes 16 pages of risk disclosures. There are some nice little warnings or “cold water on hype” as Hiltzik would say, like:

“Demand for our products is also a factor in determining advertising rates. For example, circulation levels for our newspapers, which have been declining, are a factor in determining advertising rates. All of these factors continue to contribute to a difficult advertising sales environment and may further adversely affect our ability to grow or maintain our advertising revenue.”


“If we do not achieve expected savings or our operating costs increase as a result of investments in strategic initiatives, our total operating costs would be greater than anticipated. In addition, if we do not manage our costs properly, such efforts may affect the quality of our products and our ability to generate future revenues. Reductions in staff and employee benefits and changes to our compensation structure could also adversely affect our ability to attract and retain key employees.”

These are only two of many statements made in the LA Times’s parent company risk factors. If someone was to only read these excerpts, they would think the LA Times is doomed.

Hiltzik anticipated the boilerplate argument, but his counter argument is lacking. He wrote:

“Tesla’s legions of fans undoubtedly will point out that almost every company’s SEC reports include risk disclosures, and for the most part, they’re boilerplate. That’s true as far as it goes, but Tesla isn’t just any company. It’s a highly speculative play that hasn’t racked up a significant performance history, and it has lost money every year.”

So the statements are not boilerplate because “Tesla isn’t just any company”? Let’s forget for a second that this doesn’t make sense whatsoever and look at the second part of the claim: “Tesla hasn’t racked up a significant performance history”.

Hiltzik, who has once been suspended by the Times for sockpuppeting, is forgetting that Tesla increased its production rate from 600 cars per year in 2011 to 50,000 in 2015, and it is on track to double its production rate again in 2016.

While no one is implying that Tesla’s ramp up to 500,000 cars per year by 2018 will be easy or that delays are out of the question, the LA Times’ piece is being extremely misleading by implying that Tesla is almost backtracking on its plan.

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