Tesla reportedly asks for money back on payments to suppliers

Tesla reportedly asks for money back on payments to suppliers

Tesla has confirmed it had asked a small number of suppliers to cut prices on ongoing, long-term projects to improve its future cash flow, after a report in the Wall Street Journal about a discount request sending shares down as much as 6.6 percent.

The Journal cited a memo from a manager to a supplier, saying that all suppliers are being asked to help Tesla become profitable.

Telsa took another financial hit on Monday, with shares in the electric carmaker dropping nearly 5 per cent after it was reported to have asked some U.S. suppliers to return payments made by the money-losing company.

In its ongoing effort to reach profitability by the end of this year, Tesla has asked several of its suppliers to lower prices retroactively on components of the Model 3, including some contracts that date back to 2016. In addition to boosting Model 3 production, Tesla in short order plans to build new factories in China and Europe and bring the Model Y sport-utility vehicle, a semi truck, pickup and roadster to market. Analysts say Tesla needs to sell a lot more cars.

Tesla requested the supplier return what it calls a meaningful amount of money of its payments since 2016, according to the memo. The company has been burning cash at worrying rates, with US$1 billion spent during the first quarter of this year alone.

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Still, industry analysts said it is unusual for carmakers to request refunds for two previous years, as Tesla has demanded.

Company CEO Elon Musk stated on his official Twitter account that any refunds from suppliers would only involve those from Q3 and beyond would be counted. "It would not be correct to apply historical cost savings to current quarter", tweeted Musk. "It's simply ludicrous and it just shows that Tesla is desperate right now", he said.

While certainly an ambitious goal given Tesla's history, there's reason to believe that Musk's promise might actually pan out.

The latest bad news came after the entrepreneur got it a confrontation with Vernon Unsworth, a British cave diver who helped rescue a team of Thai soccer players from a system of flooded caves.

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