Tesla Turns To Suppliers To Help It Become Profitable

Tesla Model 3

The company, which has already tapped the debt and equity markets for much-needed cash, turned recently to some suppliers for "meaningful" rebates on payments made to them since 2016, according to a report. It is spending about $1 billion a quarter as it ramps up manufacturing of the Model 3 sedan, a lower-priced vehicle that is key to Tesla's plans of becoming a major mass-market automaker.

Musk, Tesla's co-founder and CEO, confirmed on Twitter that Tesla is asking for money from its suppliers. According to a leaked memo, the company is requesting money back from suppliers to help the auto company become profitable, as if this is the responsibility of the company's suppliers.

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

"This is troubling for us to hear", said Morningstar analyst David Whiston in a note to clients.

In June, Tesla said it was cutting several thousand jobs to become sustainable profitable without endangering the ramp-up of Model 3 production. 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.

Abuse mars Geraint Thomas's historic summit victory at Tour de France
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As a refresher, Musk told Bloomberg: "Once we break through to mass-market cars, where mass-market is on the order of a quarter million vehicles per year, I can not see us doing a 1.2-million-vehicle program of one particular model".

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

Tesla shares have fallen sharply after it was revealed the electric carmaker is seeking refunds from some suppliers.

Musk has said he won't need to raise cash this year, but some analysts have doubts.

Tesla burned through more than $700 million in the first quarter - leaving it with $2.7 billion cash on hand. "It's simply ludicrous and it just shows that Tesla is desperate right now", he said. The company also has taken $1,000 deposits for Model 3 orders to help fund development and manufacturing, which established carmakers don't have to do.

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