Submitted via IRC for AndyTheAbsurd
Tesla has asked some suppliers to refund a portion of what the electric-car company has spent previously, an appeal that reflects the auto maker’s urgency to sustain operations during a critical production period.
This is bad news if you pre-ordered and were thinking about getting a refund but haven't gotten around to it yet.
Source: https://www.wsj.com/articles/tesla-asks-suppliers-for-cash-back-to-help-turn-a-profit-1532301091 (Paywalled.)
See also: Miami Herald and electrek.co, which adds:
Update: Tesla sent us a full statement:
“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. We’re focused on reaching a more sustainable long term cost basis, not just finding one-time reductions for this quarter, and that’s good for Tesla, our shareholders, and our suppliers who will also benefit from our increasing production volume and future growth opportunities. We asked fewer than 10 suppliers for a reduction in total capex project spend for long-term projects that began in 2016 but are still not complete, and any changes with these suppliers would improve our future cash flows, but not impact our ability to achieve profitability in Q3. The remainder of our discussions with suppliers are entirely focused on future parts price and design or process changes that will help us lower fundamental costs rather than prior period adjustments of capex projects. This is the right thing to do.”
(Score: 2) by opinionated_science on Wednesday July 25 2018, @12:43PM (1 child)
Honestly, with so many "shorters" (who are in debt!) , and opposition car companies not wanting competition/technology change, it is very hard to read *any* news on Tesla neutrally.
I guess we'll only have to wait a few months to find out for real....;-)
(Score: 0) by Anonymous Coward on Wednesday July 25 2018, @02:42PM
This isn't particularly surprising though, Tesla isn't run by people who know what they're doing and they recently offered everybody in queue the opportunity to lock in their orders even though they can't produce cars fast enough to make that make sense.
I'd be very surprised if Tesla survives the coming recession. Even in the best case scenario these are still luxury items. A smaller and smaller number of people need and can pay for a car to begin with, not to mention the extra cost you pay for electric. Now that they're running out of rebates, it's just going to get worse if they don't figure out what they're doing wrong.
(Score: 4, Informative) by cmdrklarg on Wednesday July 25 2018, @02:48PM (5 children)
More Tesla FUD. I mean, it's not like all companies go back to their suppliers to ask for better (lower) pricing on the stuff they supply.
They're not trying to turn a profit *right now*. They're trying to ramp up production. Profits come later.
The shorters are losing more than their shorts I'd say.
Answer now is don't give in; aim for a new tomorrow.
(Score: 0) by Anonymous Coward on Wednesday July 25 2018, @04:09PM (3 children)
"We've got better negotiating leverage now so we can now demand our suppliers give us more favorable terms on long term spending than the ones we actually agreed to previously when they were supplying us in good faith." [unspoken... because we could go somewhere else if we need to.]
yeah, nothing ethically problematic there. Implies nothing about their willingness to stand up to long term commitments on pre-agreed terms at all. I'm sure all companies try to welsh out of their agreements made when they're struggling. (Actually they probably do, granted, but that doesn't give Tesla a free pass.)
(Score: 0) by Anonymous Coward on Wednesday July 25 2018, @05:52PM (2 children)
I think they are saying, something along the lines of:
It does leave a bad taste in the mouth, but I don't think it is wrong to ask for a deal when it becomes apparent that you will be able to make more deals soon.
(Score: 2) by bob_super on Wednesday July 25 2018, @07:49PM
Tens of thousands of people pretty much do this for a living, and it's a full-time job (many full-time jobs, for big companies).
I like what Tesla does, in general. Yet this is not "news"
(Score: 0) by Anonymous Coward on Wednesday July 25 2018, @08:33PM
Automotive companies asking for concessions on future purchases is commonplace and only natural. Tesla is asking for discounts for things they've already purchased which is quite another (ethically questionable) thing. Tesla should tread lightly. If they ever find themselves in a credit-constrained environment they will have difficulty finding suppliers and could be forced to pay upfront and/or at a premium.
(Score: 0) by Anonymous Coward on Wednesday July 25 2018, @08:46PM
Stuff you're going to buy in the future sure. It is uncommon when you're asking for a rebate for stuff you've already purchased though.
“Automakers often have brutal pricing demands on suppliers for future work, but retroactive rebates is not something we hear much about,”
"Musk has told investors he expects to score profits and positive cash flow for the last two quarters of 2018."
http://www.latimes.com/business/la-fi-hy-tesla-stock-20180723-story.html [latimes.com]