Tesla’s shares drop on leak of embarrassing memo asking for money back

24 July, 2018, 18:56 | Author: Shannon Aguilar
  • Tesla shares sink on reports carmaker is running short on cash

He said it's more serious if the company needs more cash to continue operating, noting that investors are likely to be concerned if Tesla has to take unusual steps to shore up its finances. 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.

The company's shares dropped as much as 5.9pc yesterday, following the report. The electric-car maker made the request to fewer than 10 suppliers related to capital expenditures for long-term projects that started as far back as 2016 and aren't complete, a spokesman said in a statement. Tesla called such requests a standard part of procurement negotiations to improve its competitive advantage, especially as it increases Model 3 production, the Journal said.

A memo sent to suppliers allegedly asked the third parties to send back a "meaningful" amount of cash for work dating back as early as 2016. Panasonic Corp, Magna International Inc, Continental AG and Robert Bosch GmbH are among Tesla's suppliers, according to data compiled by Bloomberg.

"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.

Tesla's Australia and Asia media office, as well as a spokesman and spokeswoman in the US, didn't reply to emails seeking comment on the Journal report.

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Its CEO Elon Musk also tweeted that any costs accounted for in the next quarter would not be retroactive.

Supply-chain consultants told the paper that sometimes automakers will demand a reduction in price for a current contract going forward or use leverage of the promise of a new deal to get upfront savings.

Musk was responding to a post by Electrek that cited the Journal article and he didn't elaborate.

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.



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