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Tesla shares hit by report it is seeking refunds | Tesla shares hit by report it is seeking refunds |
(about 4 hours later) | |
Tesla shares have fallen following a report that it is seeking refunds from some suppliers. | |
The electric carmaker, which is headed by Elon Musk, told suppliers the refunds were critical to its ability to stay in business, according to the Wall Street Journal. | The electric carmaker, which is headed by Elon Musk, told suppliers the refunds were critical to its ability to stay in business, according to the Wall Street Journal. |
The refund request applies to money that Tesla has paid to some suppliers since 2016, according to the Journal. | |
Tesla said the appeal was a standard part of procurement negotiations. | |
In a statement released Monday, the firm said it had asked fewer than 10 companies to discuss costs related to projects that dated to 2016. | |
"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," it said. | |
Initially, Tesla shares dropped by more than 5% on Monday morning as investors responded to the report, although they recovered some ground later. | Initially, Tesla shares dropped by more than 5% on Monday morning as investors responded to the report, although they recovered some ground later. |
Production milestone | Production milestone |
Tesla is pushing to improve its financial position after spending heavily to boost production of its latest car, the Model 3. | |
It has said it is looking to reduce spending on capital projects. The firm also announced it would cut about 9% of its workforce. | |
Earlier this month, Tesla also said it had finally hit its target of making 5,000 Model 3 cars in a week at the end of June - a milestone that could mean it starts receiving payments to alleviate its cash crunch. | |
Chief executive Elon Musk has dismissed worries that the firm will run out of cash and need to raise more money. | |
Instead, he has told investors that he expects the firm to turn a profit in the third quarter of this year. | Instead, he has told investors that he expects the firm to turn a profit in the third quarter of this year. |
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