Tesla sinks on report that suppliers were asked to return cash

23 July, 2018, 22:13 | Author: Brooke Harris

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

Tesla, whose eroding cash position has alarmed investors, requested a "meaningful" amount of payments made since 2016 to be returned, according to the letter.

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.

The disclosure was contained in a memo sent last week by a global supply manger and obtained by the Wall Street Journal.

Tesla probably has some leverage to gain suppliers' support, given that the type of parts it uses is probably a bit different from other automakers and it may even be the only customer in some cases, said Koji Endo, an auto analyst at SBI Securities Co.in Tokyo.

Police ID suspect in deadly barricade situation at Trader Joe's in LA
His grandmother was taken to a hospital in critical condition but her current condition was not immediately known. One employee was killed and as many as 50 people were trapped or held hostage in the store for about three hours.

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.

With high expenses and CEO Elon Musk's unwillingness to raise additional cash, this may prove to be another means to increase Tesla's cash flow.

Business Insider has reached out to Tesla for comment on the Wall Street Journal report and will update this post if a statement is received. Tesla declined to comment on the memo, but did confirm that they have been seeking price reductions from suppliers for their recent projects.

At the same time, and through the second and third quarters, it is ramping up production of its crucial Model 3. Tesla has been burning through cash at a rate of about $1bn a quarter, or more than more than $7,430 every minute, according to data compiled by Bloomberg, and finished the first quarter with $2.7bn in cash on hand.

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