Tesla Asks Suppliers for Refunds to Help Profit

Tesla Asks Suppliers for Refunds to Help Profit

Tesla Asks Suppliers for Refunds to Help Profit

However, a spokesperson at the company did confirm that Tesla has been seeking price reductions from suppliers for projects, some of which date back as far as 2016.

In the meantime, manufacturing consultant Dennis Virag told The WSJ that Tesla's request shows that it's "desperate right now", and that the company is "worried about their profitability but they don't care about their suppliers' profitability".

Chief executive Elon Musk has dismissed worries that the firm will run out of cash and needs to raise more money.

Becoming profitable is clearly a top priority for Musk, who is juggling several highly ambitious companies at the moment, including both SpaceX and the Boring Company.

David Whiston, an analyst at... Tesla has been hemorrhaging cash at a rate of about US$1 billion a quarter, and finished the first quarter of 2018 with US$ 2.7 billion in cash on hand. The remainder of our discussions with suppliers are entirely focused on future parts price and design or process changes that will help us lower fundamental costs rather than prior period adjustments.

The Tesla logo is seen at the entrance to Tesla Motors' new showroom in Manhattan's Meatpacking District in New York City, U.S., December 14, 2017.

Tesla has been burning through cash as it ramps up production of its Model 3 sedan.

Still, industry analysts said it is unusual for automakers to request refunds for two previous years, as Tesla has demanded. It has promised to produce 5,000 Model 3s in a single week, but has only met that goal last quarter after months of delays. Even if Tesla's operations are cash-flow neutral this year and next, just paying off that debt would leave Tesla with only $900 million in cash on the balance sheet, said Joel Levington, a debt analyst with Bloomberg Intelligence.

The company experienced a similar shares fall last week, as a result of a tweet from Musk that labelled a British diver assisting in a rescue effort in Thailand as a "pedo guy".

The company's shares dropped as much as 5.9 percent on Monday following the report.

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