Tesla To Suppliers: Can Return Some Money Back To Us?

Tesla is asking suppliers to refund some of the cash on past work as a way to make the automaker profitable.

The Wall Street Journal obtained a memo that was sent to a Tesla supplier last week. The company requested that the supplier return " a meaningful amount of money of its payments since 2016." The memo goes onto say that the request is essential to Tesla's "continued operation" and would "continue the long-term growth between both players."

Its unclear how many suppliers received this memo. Tesla's list of suppliers include Magna, Panasonic, and Robert Bosch GmbH.

Tesla declined to comment on the memo, but did confirm that it is seeking price cuts from suppliers on various projects, some which date back to 2016. The company said such requests are a standard part of negotiations with suppliers. Supply-chain consultants say this is normal for automakers to request price reductions on current projects. Asking for money back on a completed one is very unusual.

“It’s simply ludicrous and it just shows that Tesla is desperate right now. They’re worried about their profitability but they don’t care about their suppliers’ profitability,” said Dennis Virag, a manufacturing consultant.

This report casts serious questions as to Tesla's money situation. The company has been burning through a billion dollars per quarter, and finished the first quarter with $2.7 billion cash on hand.

Source: Wall Street Journal (Subscription Required)