Cash problems at Tesla are evidently becoming very serious as a number of analysts expected. Reuters reported today that the electric vehicle manufacturer, known for its incredible rate of cash burn, is asking its suppliers for help in the form of refunds on previous payments.
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The stock value fell four percent following the news that Tesla is seeking a refund of part of the money to get closer to profitability that has so far eluded it. The news was first reported by Wall Street Journal, which cites a letter from one of the major suppliers claiming that Tesla described the refund as an investment necessary for the continuation of the company’s operations. Although Tesla has not confirmed this, they acknowledged that they are seeking discounts on some projects dating back to 2016.
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As one analyst told Reuters, pressuring suppliers for future projects is not unusual in the auto industry, but seeking rebates retroactively is. The news has thus intensified speculation that the company will need fresh capital before the end of this year, although CEO Elon Musk has claimed otherwise and promised profitability in the third and fourth quarters of this year (the loss in the first quarter of this year was $709 million).
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It seems that betting all cards on the Model 3, with which Tesla is trying to dominate the segment of the more affordable electric vehicle market, has begun to take a toll on its already unstable finances. Given the company’s recent decision to lay off several thousand workers, this news does not sound implausible.
