Current Events > Tesla Asks Suppliers for Cash Back to Help Turn a Profit

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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
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This might be related.

https://money.cnn.com/2018/07/19/technology/business/tesla-downgrade/index.html
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Tmaster148 posted...

This might be related.

https://money.cnn.com/2018/07/19/technology/business/tesla-downgrade/index.html

Yeah that would affect their cash burn.
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lmao

@FLUFFYGERM
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TSLA down about 5%
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sktgamer_13dude posted...

lmao

@FLUFFYGERM

IT'S SHORT SELLERS TELLING LIES!!!!!!1111!!!
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On a serious note, keep in mind that this is AFTER Musk has moved billions of dollars from SpaceX and PayPal to Tesla to buttress the books, AND Tesla accepted billions of dollars in government funding from states and the Federal government for his 'green energy initiatives.'

Tesla is a financial timebomb, and is going to go off very soon.

They literally have thousands of cars sitting in warehouses.

https://www.zerohedge.com/news/2018-07-19/why-are-thousands-teslas-sitting-field-california-0
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lmao

musk
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darkjedilink posted...

They literally have thousands of cars sitting in warehouses.

Had you taken the 5 seconds it takes to read the article, they said the reason the orders are being canceled is because they can't meet the demand fast enough. People are getting impatient with the wait and canceling.

I think I know why fluffy likes picking on you. You make it so fucking easy.
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Tyranthraxus posted...

darkjedilink posted...

They literally have thousands of cars sitting in warehouses.

Had you taken the 5 seconds it takes to read the article, they said the reason the orders are being canceled is because they can't meet the demand fast enough. People are getting impatient with the wait and canceling.

I think I know why fluffy likes picking on you. You make it so fucking easy.

Except that means they need to slow production down, not speed it up.
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Musk is literally the Monorail conman Lyle Lanley from The Simpsons

I've been thinking of buying some stock with them it's been going down for days now. Once it hits close to 250-275 I'm going in.
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clearaflagrantj posted...

Musk is literally the Monorail conman Lyle Lanley from The Simpsons

"I've sold Teslas to Brockway, Ogdenville, and North Haverbrook!"
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https://www.bloomberg.com/news/articles/2018-07-23/tesla-asks-suppliers-for-refunds-to-help-turn-a-profit-wsj-says

The U.S. auto manufacturer declined to comment on the specific memo, but confirmed its seeking price reductions from suppliers for projects, some of which go back to 2016, according to the report. Tesla called such requests a standard part of procurement negotiations to improve its competitive advantage, especially as it increases Model 3 production, the Journal said.

Its not clear how many suppliers were asked to hand back money, with some saying they werent aware of the request, the newspaper said. Panasonic Corp, Magna International Inc, Continental AG and Robert Bosch GmbH are among Teslas suppliers, according to data compiled by Bloomberg.

Its not so unusual for carmakers to ask suppliers for discounts retroactively, and some Japanese automakers have done it before, said Tatsuo Yoshida, an analyst at Sawakami Asset Management Inc. in Tokyo, who worked at Nissan Motor Co. between 1983 and 1999.

Tesla probably has some leverage to gain suppliers support, given that the type of parts it uses is probably a bit different from other automakers and it may even be the only customer in some cases, said Koji Endo, an auto analyst at SBI Securities Co. in Tokyo. If Tesla goes bankrupt, those suppliers lose everything.
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Elon Musk is a fraud.

We all knew @FLUFFYGERM was going to have something spinning this into a positive.

I wonder how he feels about Thai rescue divers?
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It's Bloomberg saying those things, not me. There is literally no spin on it.
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FLUFFYGERM posted...

It's Bloomberg saying those things, not me. There is literally no spin on it.

Actually, it wasn't even Bloomberg, but an analyst they talked to, who talked about something Nissan did before they started using Ford as a parts supplier.

This isn't a good look in any way for Tesla. However, at least you aren't blaming short-sellers anymore.
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Bloomberg the news site, not Bloomberg himself.

And short sellers are definitely running with this to exaggerate the issue. Same as before. That's why none of you knew that this already does happen in the automotive industry.
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FLUFFYGERM posted...

Bloomberg the news site, not Bloomberg himself.

And short sellers are definitely running with this to exaggerate the issue. Same as before. That's why none of you knew that this already does happen in the automotive industry.

The requests have happened, exclusively by companies in dire financial straits. They almost always end up getting swallowed up by Ford or Volkswagen.
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There's also this delicious morsel that you won't see floating around in short seller RSS feeds.

https://www.thestreet.com/investing/tesla-model-3-is-already-really-profitable-14653241
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FLUFFYGERM posted...

There's also this delicious morsel that you won't see floating around in short seller RSS feeds.

https://www.thestreet.com/investing/tesla-model-3-is-already-really-profitable-14653241

That 'delicious morsel' is one dude talking out of his ass.
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darkjedilink posted...

That 'delicious morsel' is one dude talking out of his ass.

Kinda like what you do
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darkjedilink is literally trembling out of fear after hearing that the model 3 will be profitable
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FLUFFYGERM posted...

darkjedilink is literally trembling out of fear after hearing that the model 3 will be profitable

You've yet to show that it will be. Just because this guy made up numbers doesn't mean it will - I can say every fastener costs $1,000, meaning each car loses billions. It would literally be just as credible as your article.
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has a company done this exact thing before? I'm getting major deja vu here
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darkjedilink posted...

That 'delicious morsel' is one dude talking out of his ass.

The analysis by "Munro & Associates Inc" is legit.

But that doesn't eliminate the cash burn that Tesla is going through.

They are literally burning cash much faster than they are profitting.

Don't forget that they are building a Super Charger Network while Increasing their Manufacturing Capacity for the Tesla Model 3, while dealing with a significant backlog in repairs for their existing cars.

And they still have to make the Tesla Model S & X & old Roadster for the few folks who want that thing.

Don't forget that they're part way through the ramping up of the Tesla Semi-Truck.

And have to pay for R&D for the new Tesla Model Y (Pickup Truck).

This is also not counting the Joint Battery Production plant that has to keep on improving
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darkjedilink posted...

You've yet to show that it will be. Just because this guy made up numbers doesn't mean it will - I can say every fastener costs $1,000, meaning each car loses billions. It would literally be just as credible as your article.

But the guy isn't a random dude making up numbers.

He literally has access to large databases for how much each part costs in mass volume for manufacturing.

But that doesn't change Tesla's number other issues.

Like having Manufacturing near Silicon Valley in Freemont.

That's ridiculously expensive compared to picking a cheaper place within the US to manufacture.
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KamenRiderBlade posted...

darkjedilink posted...

You've yet to show that it will be. Just because this guy made up numbers doesn't mean it will - I can say every fastener costs $1,000, meaning each car loses billions. It would literally be just as credible as your article.

But the guy isn't a random dude making up numbers.

He literally has access to large databases for how much each part costs in mass volume for manufacturing.

But that doesn't change Tesla's number other issues.

Like having Manufacturing near Silicon Valley in Freemont.

That's ridiculously expensive compared to picking a cheaper place within the US to manufacture.

He's literally inventing the numbers out of thin air.
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darkjedilink posted...

He's literally inventing the numbers out of thin air.

It's not inventing out of thin air.

https://leandesign.com/

They are old school pro's at analyzing BOM (Bill of Material) costs for the Auto industry & finding out supplier parts costs at mass once the vehicle is literally dissected part for part.

They then go through their giant data base, assemble the Total BOM costs, and make giant analysis reports.

It's pretty standard within the Automotive industry to be hired to tear down the oppositions vehicles and find out the costs / design advantages of each model.

You may not like it, but that's the way of the world.
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Tesla is going through a lot of cash, but they'll be fine in the long run.
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As brilliant as Musk seems to be he is a giant Asshole of a person
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KamenRiderBlade posted...

darkjedilink posted...

He's literally inventing the numbers out of thin air.

It's not inventing out of thin air.

https://leandesign.com/

They are old school pro's at analyzing BOM (Bill of Material) costs for the Auto industry & finding out supplier parts costs at mass once the vehicle is literally dissected part for part.

They then go through their giant data base, assemble the Total BOM costs, and make giant analysis reports.

It's pretty standard within the Automotive industry to be hired to tear down the oppositions vehicles and find out the costs / design advantages of each model.

You may not like it, but that's the way of the world.

It also only works with standardized parts. Pretty much nothing on it is standardized, so they are literally guessing at the costs of a lot of these parts.

Which is my point.
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darkjedilink I hope you aren't betting big on those Tesla shorts
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darkjedilink posted...

It also only works with standardized parts. Pretty much nothing on it is standardized, so they are literally guessing at the costs of a lot of these parts.

Which is my point.

I highly doubt that statement.

There should be a good majority of it that is standardized.

Otherwise, the analysis is no good.

And given their track record, I'm more than willing to bet that they have access to information, even on the inside of Tesla, that we normies wouldn't have.
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