Tesla goes into reverse as it begs suppliers for cash

Tesla goes into reverse as it begs suppliers for cash

Tesla declined to comment on the memo, but did confirm that they have been seeking price reductions from suppliers for their recent projects. It is alleged that Tesla says in the memo that it asked all its suppliers for support, with some of the money framed as a retroactive discount.

"Only costs that actually apply to Q3 & beyond will be counted".

Instead, he has told investors that he expects the firm to turn a profit in the third quarter of this year.

"If there are any one-time windfalls that aid in Tesla achieving its profit goals, we expect the market would view that as unsustainable", said Jamie Albertine, senior automotive analyst for Consumer Edge.

The race to get the Model 3 going may have added unexpected costs in the second quarter.

Tesla Asks Suppliers for Cash Back in a Bid to Achieve Profitability
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"We still have the same concerns, though, about general cash flow needs for the company, production quality issues, automation or lack thereof, as well as concerns on profitability", Mr Osborne said. As a spokesperson told us "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 of capex projects". It is spending about $1 billion a quarter as it ramps up manufacturing of the Model 3 sedan, a lower-priced auto that is key to Tesla's plans of becoming a major mass-market automaker.

As pressure mounted to ramp up Model 3 production, Musk set up a tent outside Tesla's plant in Fremont, California.

The firm managed to hit its target of building 5,000 Model 3 cars a week at the start of this month - but only after building a giant plastic tent in the vehicle park of its California factory to house an extra production line. In the memo, Tesla described its plea as a way to invest in its company and ensure that it is able to continue ordering new parts in the future.

All of that has to happen while Tesla carries $10.5 billion in debt. Tesla already cut its workforce by 9% in June, and Musk reportedly promised to slow spending.

Shares in the company were last down 3.4 percent to $303.22.

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