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| Topic | Tesla Asks Suppliers for Cash Back to Help Turn a Profit |
| SK8T3R215 07/22/18 10:24:14 PM #1: | Tesla Inc. has asked some suppliers to refund a portion of what the electric-car company has spent previously, an appeal that reflects the auto makers urgency to sustain operations during a critical production period. The Silicon Valley electric-car 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. Tesla requested the supplier return what it calls a meaningful amount of money of its payments since 2016, according to the memo. The auto makers memo, sent by a global supply manager, described the request as essential to Teslas continued operation and characterized it as an investment in the car company to continue the long-term growth between both players. While Tesla said in the memo that all suppliers were being asked to help it become profitable, it is unclear how many were asked for a discount on contracted spending amounts retroactively. Some suppliers contacted about the request said they were unaware of such a demand. Tesla declined to comment on the specific memo. But it confirmed it is seeking price reductions from suppliers for projects, some of which date back to 2016, and some of which havent been completed. The company called such requests a standard part of procurement negotiations to improve its competitive advantage, especially as it ramps up Model 3 production. The surprising requests raise further questions about Teslas cash position, which has dwindled after it struggled to boost production of its first car designed for mainstream buyers, the Model 3. After months of delays, Tesla last quarter reached its longstanding goal of making 5,000 Model 3s in a single week, which, if sustained, will help it generate cash. Auto makers and suppliers have complicated relationships, each fighting for the best deal under immense pricing pressure. Supply-chain consultants say sometimes auto makers will demand a reduction in price for a current contract going forward or use leverage of awarding a new deal to get upfront savings on a contract. But they say it is unusual for an auto maker to ask for a refund for past work. Dennis Virag, a manufacturing consultant who has worked in the automotive industry for 40 years, said a solicitation like Teslas could put suppliers in financial peril and jeopardize its future supply of car parts. Its simply ludicrous and it just shows that Tesla is desperate right now, he said. Theyre worried about their profitability but they dont care about their suppliers profitability. https://www.wsj.com/articles/tesla-asks-suppliers-for-cash-back-to-help-turn-a-profit-1532301091 --- New York Knicks, New York Jets, New York Yankees. ... Copied to Clipboard! |
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