Tesla reportedly asks for money back on payments to suppliers

Tesla's financial woes have been in the headlines for awhile now, and their latest move isn't exactly one that instills confidence. According to The Wall Street Journal, Tesla has been sending memos to its suppliers asking for retroactive discounts. In other words, it's asking for cash back on payments it has made to these suppliers since 2016. While hard numbers aren't available, Tesla described it as a "meaningful amount of money" in the memo.

The reasoning behind Tesla's request is to help the company become profitable. "The auto maker's memo, sent by a global supply manager, described the request as essential to Tesla's continued operation and characterized it as an investment in the car company to continue the long-term growth between both players," reports The Wall Street Journal.

The company confirmed to The Wall Street Journal that it is seeking these retroactive discounts for various projects. While Tesla said that these types of requests are standard in negotiations, consultants say that it's rare to ask for a discount after payments have already been made. "It's simply ludicrous and it just shows that Tesla is desperate right now," Dennis Virag, a manufacturing consultant, told The Wall Street Journal. "They're worried about their profitability but they don't care about their suppliers' profitability."

Tesla has been struggling to ramp up production of its Model 3 vehicles; it has suffered numerous setbacks and delays. The company has finally hit its goal of producing 5,000 Model 3s per week and has opened up orders of the car to everyone in the US. It seems like the company is on track after laying off nine percent of its workers, but this new development casts some doubt on how well the company is actually doing, as this move looks looks pretty desperate.

Source: The Wall Street Journal



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