U.S. electric-car maker praised by Obama probed over foreign parts

  • **FILE** A Tesla Model S is shown in the showroom at the Washington Square Mall in Portland, Ore., on  July 20, 2012. (Associated Press)**FILE** A Tesla Model S is shown in the showroom at the Washington Square Mall in Portland, Ore., on July 20, 2012. (Associated Press)
  • **FILE** The Tesla showroom is seen at the Washington Square Mall in Portland, Ore., on July 20, 2012. (Associated Press)**FILE** The Tesla showroom is seen at the Washington Square Mall in Portland, Ore., on July 20, 2012. (Associated Press)
  • **FILE** Tesla workers cheer on the first Tesla Model S cars sold during a rally at the Tesla factory in Fremont, Calif., on June 22, 2012. (Associated Press)**FILE** Tesla workers cheer on the first Tesla Model S cars sold during a rally at the Tesla factory in Fremont, Calif., on June 22, 2012. (Associated Press)
  • **FILE** A Tesla Model S is seen outside the Tesla factory in Fremont, Calif., on June 22, 2012. (Associated Press)**FILE** A Tesla Model S is seen outside the Tesla factory in Fremont, Calif., on June 22, 2012. (Associated Press)
  • **FILE** A sign is shown inside of electric car maker Tesla Motors showroom in San Jose, Calif., on May 25, 2011. (Associated Press)**FILE** A sign is shown inside of electric car maker Tesla Motors showroom in San Jose, Calif., on May 25, 2011. (Associated Press)
  • **FILE** People look at electric car Tesla Motors vehicle at a showroom in San Jose, Calif., on May 25, 2011. (Associated Press)**FILE** People look at electric car Tesla Motors vehicle at a showroom in San Jose, Calif., on May 25, 2011. (Associated Press)

The year after President Obama singled out the company for creating lots of American jobs, California-based Tesla Motors became the focus of a federal probe into whether the automaker was using foreign instead of American parts in manufacturing their electric vehicles, records show.

The Immigration and Customs Enforcement (ICE) investigation centered on whether the company was using its foreign trade zone status to bypass federal loan requirements that companies must buy American, according to documents obtained through the Freedom of Information Act.

Click here to view the investigative memo (PDF)

Tesla closed on a $465 million federal loan with the U.S. Department of Energy in early 2010. Founded in 2003, the company sells its electric Model S luxury sedan for anywhere from $49,000 to $97,900, after federal tax credits.

ICE investigators first approached the Department of Energy’s Office of Inspector General one year ago this week, months before the company’s application for “subzone” trade zone status was approved in September.

ICE investigators sought loan documents from the Energy Department because they were “looking into whether Tesla Motors is using foreign-made parts in manufacturing their vehicles rather than U.S.-made parts,” according to an Energy Department inspector general memo obtained by The Times.

The ICE official, whose name was redacted in records provided to The Times, also said the agency was “proactively investigating” whether Tesla was using its foreign trade zone status to bypass loan requirements that “may stipulate companies must buy American,” records state.

Created in the 1930s, federally approved “foreign trade zones” designate certain areas at or near a customs port of entry as locations where products can be imported without the usual customs entry procedures and import duties.

Tesla’s application for a “subzone” within the city of San Jose’s foreign trade zone was approved on Sept. 20, according to federal records.

The Energy Department watchdog office ultimately declined to join the probe, telling ICE that the federal loan to Tesla came about through a federal appropriations bill — not under Mr. Obama’s stimulus program.

While lots of taxpayer money was at stake either way, the difference in the funding source meant that the Tesla loan “does not have the same buy American requirement,” investigators from the Energy Department’s inspector general told ICE, according to records.

The details about the investigation came to light as a result of a request by The Times for final summaries for dozens of investigations by the Energy Department watchdog office for probes involving federal stimulus funds.

The two-page summary detailing the Energy Department watchdog’s limited involvement in the Tesla investigation provides no information on how, or whether, the customs probe concluded.

“As a matter of policy, we neither confirm nor the deny the existence of ongoing investigations,” said Gillian Christensen, a spokeswoman for Immigrations and Customs Enforcement.

Tesla makes no mention of the government investigation in its Securities and Exchange Commission disclosures, though there’s also no indication from the Energy Department investigative memo that the company was notified about the probe.

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