Tesla shares plummet after reportedly asking suppliers for cash rebates

Tesla Asks Suppliers for Cash Back in a Bid to Achieve Profitability

Tesla Asks Suppliers for Cash Back in a Bid to Achieve Profitability

When asked by WSJ, Tesla denied the memo, however confirmed it is seeking price reductions from suppliers for projects, some of which date back to 2016, and some of which haven't been completed.

Tesa CEO, Elon Musk, is doing everything he can to achieve profitability by the second half of the year.

"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 Motors has reportedly asked some of its parts suppliers for financial support, including a partial refund of supply deals.

The report also said it's not clear how many suppliers received the request.

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Tesla's cash position is a concern because the company has burnt through billions of dollars to step up production of the Model 3, its first mass-market auto. 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.

Tesla may be ramping up its production schedule for the Model 3, but it's apparently coming with pretty serious costs. At the beginning of July the company said it met a longtime target of building 5,000 Model 3s in a week, but industry analysts have questioned whether Tesla can sustain that pace. The stock is down from a peak of $385 in September, with many investors growing concerned about Tesla's spending and its ability to meet its production goals.

All of that has to happen while Tesla carries $10.5 billion in debt. "It's simply ludicrous and it just shows that Tesla is desperate right now", Dennis Virag, a manufacturing consultant, told The Wall Street Journal.

Tesla was trading below $300 per share at the opening bell on Wall Street, losing over $2.3 billion off its market capitalization.

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".

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