Tesla tumbles on report that it asked suppliers for refunds
S E E D E D C O N T E N T
Shares of Tesla fell more than 6 percent Monday after a report that the electric car maker has turned to some suppliers for a refund of previously made payments in a bid to turn a profit.
Tesla has asked some suppliers to refund money it has paid since 2016, the Wall Street Journal reported Sunday, citing a memo.
The memo, which the paper said was sent by a global supply manager, described the request as essential to Tesla's continued operation and characterized it as an investment in the car company to continue the long-term growth between both players.
Tesla could not be immediately reached for comment, although the WSJ quoted the company as confirming it is seeking price reductions for projects, some of which date back to 2016.
CEO Elon Musk also tweeted: "Only costs that actually apply to Q3 & beyond will be counted. It would not be correct to apply historical cost savings to current quarter."
"Automakers often have brutal pricing demands on suppliers for future work, but retroactive rebates is not something we hear much about, and this is troubling for us to hear," David Whiston, an analyst with brokerage Morningstar wrote in a note to clients.
Tesla has been burning through cash as it ramps up production of its Model 3 sedan. While Musk has said the company does not need to raise cash this year, several analysts have predicted that the electric car maker would need to raise capital soon.
Tesla had about $3.2 billion in cash as of the first quarter ended March 31, after spending about $1 billion in the quarter.
While the WSJ reported the memo as saying that all suppliers were being asked to help the company become profitable, it said it had contacted a number of suppliers who said they were unaware of such a demand.
"This is one more sign that money is getting shorter and shorter and I am sure that Tesla needs fresh money at the latest next year," said Frank Schwope, an analyst with NORD/LB.
Tesla has said the company will be profitable in the third and fourth quarters of the year. It posted a loss of $709.6 million in its first quarter.
Last month, Tesla said it was cutting several thousand jobs across the company in a bid to slash costs and become sustainably profitable without endangering the ramp up of Model 3 production.
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Maybe it's time that Elon tends to his own business as opposed to insulting others who are doing heroic acts. I have a feeling that Tesla might have bitten off more than it can chew with the 3 and trying to get into the market of self drivig cars all at the same time.
There is something about Elon Musk and Tesla that aren't up to their public image. Musk is a better salesman than he is an engineer and I have a dark feeling that the entire company is a fiscal shell game that has started to crumble.
I think he is 'head in the clouds' type that doesn't understand that you can only do just so much at a time, withthe fiscal resources you have available. A business planning person riding reign on him would be helpful. The products he has produced are promising (well, maybe not the 3).
Tesla/Musk just signed a joint agreement to build cars in China, this may be what saves Tesla with the money the Chinese have and their commitment to going all electric ASAP this makes sense.
In 2017 of all the electric cars sold world wide a bit over 50% were sold in China.
Forgot to add the link..It's an interesting article.