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Tesla says it requested supplier discount for ongoing projects

Tesla says it requested supplier discount for ongoing projects

Electric auto manufacturer Tesla's share price fell by more than four per cent as markets opened today, after it was revealed that it had requested refunds from some suppliers for previously made payments.

"The Silicon Valley electric vehicle company said it is asking its suppliers for cash back to help it become profitable, according to a memo reviewed by The Wall Street Journal that was sent to a supplier last week".

Telsa took another financial hit on Monday, with shares in the company dropping nearly 5% after the electric automaker was reported to have asked some U.S. suppliers to return payments to the money-losing company.

Tesla, whose eroding cash position has alarmed investors, requested a "meaningful" amount of payments made since 2016 to be returned, according to the letter.

When a company asks suppliers to retroactively give money back, it's a sign that something has gone wrong.

The leak comes as Musk continues to unnerve investors, with Tesla shares falling from a year high of US$370 in mid-June to around US$301 on Monday.

Chief executive Elon Musk has dismissed worries that the firm will run out of cash and needs to raise more money. Tesla's cash burn, which was reduced to $1.1 billion on its most recent earnings report in May, will be top of mind when the company reports second quarter earnings on August 1.

"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.

Even though Tesla is making more of the sedans, the company won't complete delivery and collect revenue for many of them until the third quarter, Whiston said. "It's simply ludicrous and it just shows that Tesla is desperate right now", he said. Musk marked the occasion by saying the milestone finally made Tesla "a real company". He has lashed out at journalists for critical coverage of Tesla, and earlier this month he tweeted an unfounded and disparaging claim about a cave diver who participated in the rescue of a Thai soccer team.

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