Tesla’s shares drop after embarrassing memo asking US suppliers to return payments is leaked
The electric carmaker, which has announced thousands of job cuts, has been burning through US$1 billion in cash per quarter, or more than US$7,430 every minute
Telsa took another financial hit on Monday, with shares in the electric carmaker dropping almost 5 per cent after it was reported to have asked some US suppliers to return payments made by the money-losing company.
The disclosure was contained in a memo sent last week by a global supply manager and obtained by The Wall Street Journal. In it, the manager described the payments as essential to Tesla’s operation.
The leak came soon after Tesla announced it was cutting several thousand jobs as part of an effort to reduce costs. Tesla has been burning through cash at a rate of about US$1 billion a quarter, or more than US$7,430 every minute, according to data compiled by Bloomberg, and finished the first quarter with US$2.7 billion in cash on hand.
Musk loses US$295 million as Tesla shares fall after ‘pedo’ attack on cave rescuer
The company’s rapidly weakening cash position has spooked investors, and comes despite the claims of founder Elon Musk that Tesla is now a “real” carmaker after hitting a weekly goal of producing more than 5,000 mass-market Model 3s, the rate of production that the manufacturer hopes will turn the company’s economic position around.
The company has asked for an undisclosed rebate on money it has spent on suppliers since 2016.
After the memo was leaked over the weekend, Musk tweeted: “Only costs that actually apply to [the third quarter and] beyond will be counted. It would not be correct to apply historical cost savings to [the] current quarter.”
Still, industry analysts said it is unusual for carmakers to request refunds for two previous years, as Tesla has demanded.
“This is troubling for us to hear,” said Morningstar analyst David Whiston in a note to clients.
Tesla has ‘dangerous batteries’, whistle-blower says in spat with Musk
The leak comes as Musk continues to unnerve investors, with Tesla shares falling from a year high of US$370 in mid-June to around US$301 on Monday.
An analyst at Baillie Gifford, Tesla’s third-largest institutional shareholder, told the Journal the firm is “divided” on whether Musk is the right leader for Tesla.
The latest bad news came after the entrepreneur got into a confrontation with Vernon Unsworth, a British cave diver who helped rescue a team of Thai soccer players from a system of flooded caves.
Musk launched a personal attack on the rescuer after Unsworth questioned the usefulness of a mini-submarine that Musk offered to help in the rescue. Musk was ultimately forced to apologise.
Elon Musk celebrates as Telsa hits critical 5,000-Model 3 milestone
In early May, Musk cut off a Morgan Stanley analyst who had asked if the company should raise more capital while it could, even if it did not need it. Musk responded that he “specifically” did not want to, and called the analyst’s questions “so dry. They’re killing me.”
Tesla’s stock declined 6 per cent in about 20 minutes after his tirade.
As a possible crunch for Tesla approaches, Musk has said he has personally taken control of production and that he was sleeping occasionally at the factory.
