Following reports published in the media that the US based electric car maker Tesla had asked some of its US suppliers to return money back to the company because it was experiencing a cash crunch, shares of the company fell by7 5 per percent.
The report was published ion the Wall Street Journal and based on an internal memo that was delivered last week by a global supply manager. in the memo, the manager explained that the getting back the payments was important for the operations of the company.
This news emerged after the company made an announcement of laying off a number of thousands of its employees to reduce operational costs. According to data that is available publicly, the operations of the company is costing the company about $1bn every quarter which is equal to over $7,430 every minute. The company ended the latest first quarter with $2.7bn in cash on hand.
Investors have been spooked by the rapid speed of cash burning by the company and despite company chief Elon Musk making claiming that Tesla is now a “real” carmaker following the company achieving the weekly target of production of over5,000 of its mass-market Model 3s. that rate of production is hoped to bring a turnaround for the economic position of the company.
The memo further states that an undisclosed rebate on money that the company had spent since 2016 on 10 suppliers have been asked to be returned.
Following the revelation of the memo, Musk tweeted: “Only costs that actually apply to Q3 & beyond will be counted. It would not be correct to apply historical cost savings to current quarter.”
In a statement released on Monday, Tesla added: “Negotiation is a standard part of the procurement process, and now that we’re in a stronger position with Model 3 production ramping, it is a good time to improve our competitive advantage in this area.”
And yet, analysts find it very unusual of Tesla to request refunds for two previous years. “This is troubling for us to hear,” said Morningstar analyst David Whiston in a note to clients.
The firm is “divided” on whether Musk is the right leader for Tesla, said an analyst at Baillie Gifford, Tesla’s third-largest institutional shareholder.
Tesla and Musk has been facing one controversy after another in recent times. The latest being Musk’s confrontation on Tweeter with Vernon Unsworth, a cave diver of British origin whop was engaged in the rescue work of stranded students in a flooded cave in Thailand. After Unsworth raised questions about the usefulness of a mini-submarine that Musk offered as help in the rescue, Musk engaged in a personal attack on the rescue worker. Ultimately Musk was forced to apologize.
Earlier in May, a Morgan Stanley analyst was cut off by Musk when the analyst questions the strategy of the company of raising more cash even when it did not need it. Musk’s response was that he “specifically” did not want to, and then called the question of the analyst as “so dry. They’re killing me.” There was a decline of 20 per cent in Tesla’s stock within 20 minutes of this incident.
(Source:www.theguardian.com)
The report was published ion the Wall Street Journal and based on an internal memo that was delivered last week by a global supply manager. in the memo, the manager explained that the getting back the payments was important for the operations of the company.
This news emerged after the company made an announcement of laying off a number of thousands of its employees to reduce operational costs. According to data that is available publicly, the operations of the company is costing the company about $1bn every quarter which is equal to over $7,430 every minute. The company ended the latest first quarter with $2.7bn in cash on hand.
Investors have been spooked by the rapid speed of cash burning by the company and despite company chief Elon Musk making claiming that Tesla is now a “real” carmaker following the company achieving the weekly target of production of over5,000 of its mass-market Model 3s. that rate of production is hoped to bring a turnaround for the economic position of the company.
The memo further states that an undisclosed rebate on money that the company had spent since 2016 on 10 suppliers have been asked to be returned.
Following the revelation of the memo, Musk tweeted: “Only costs that actually apply to Q3 & beyond will be counted. It would not be correct to apply historical cost savings to current quarter.”
In a statement released on Monday, Tesla added: “Negotiation is a standard part of the procurement process, and now that we’re in a stronger position with Model 3 production ramping, it is a good time to improve our competitive advantage in this area.”
And yet, analysts find it very unusual of Tesla to request refunds for two previous years. “This is troubling for us to hear,” said Morningstar analyst David Whiston in a note to clients.
The firm is “divided” on whether Musk is the right leader for Tesla, said an analyst at Baillie Gifford, Tesla’s third-largest institutional shareholder.
Tesla and Musk has been facing one controversy after another in recent times. The latest being Musk’s confrontation on Tweeter with Vernon Unsworth, a cave diver of British origin whop was engaged in the rescue work of stranded students in a flooded cave in Thailand. After Unsworth raised questions about the usefulness of a mini-submarine that Musk offered as help in the rescue, Musk engaged in a personal attack on the rescue worker. Ultimately Musk was forced to apologize.
Earlier in May, a Morgan Stanley analyst was cut off by Musk when the analyst questions the strategy of the company of raising more cash even when it did not need it. Musk’s response was that he “specifically” did not want to, and then called the question of the analyst as “so dry. They’re killing me.” There was a decline of 20 per cent in Tesla’s stock within 20 minutes of this incident.
(Source:www.theguardian.com)