Tesla shares plunge after reports it is seeking refunds

Tesla shares plunge after reports it is seeking refunds

Tesla shares plunge after reports it is seeking refunds

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. The memo said all suppliers were being asked to help the company become profitable.

He did, however, defend the company, noting, "Only costs that actually apply to Q3 and beyond will be counted".

"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 Motors has reportedly asked some of its parts suppliers for financial support, including a partial refund of supply deals. "They're anxious about their profitability but they don't care about their suppliers' profitability".

Tesla's cash position is a concern because the company has burnt through billions of dollars to step up production of the Model 3, its first mass-market auto.

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.

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Of course, this news won't make Tesla investors happy. At the same time, and through the second and third quarters, it is ramping up production of its crucial Model 3.

Still, industry analysts said it is unusual for carmakers to request refunds for two previous years, as Tesla has demanded. "It would not be correct to apply historical cost savings to current quarter", Musk tweeted.

All of that has to happen while Tesla carries $10.5 billion in debt. Even if Tesla's operations are cash-flow neutral this year and next, just paying off that debt would leave Tesla with only $900 million in cash on the balance sheet, said Joel Levington, a debt analyst with Bloomberg Intelligence.

Tesla's stock declined 6 per cent in about 20 minutes after his tirade.

Tesla's share price is now down 4.22 per cent, after hitting a low of 4.3 per cent in pre-market trading this morning.

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