Did Tesla Inc (NASDAQ: TSLA) Ask For Supplier Refunds?

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The Wall Street Journal Reported it has reviewed a memo to a supplier from Tesla Inc (NASDAQ: TSLA) requesting "to return a meaningful portion of money spent since 2016". The reason for the rebates? To help Tesla Inc (NASDAQ: TSLA) become profitable. This news came at a moment Tesla Inc (NASDAQ: TSLA) finds itself particularly vulnerable after reports the company is bleeding cash and can't meet with production deadlines.  These problems are only exacerbated by CEO and Founder Elon Musk's pre-occupation with Twitter (NYSE: TWTR) arguments, and creating a journalist scoring website that, some claim, put an undue focus on female journalists. All of this has served to undercut Musk's personal claims that he is so busy he has to sleep on the factory (or tent?) floor.

Is Tesla Inc (NASDAQ: TSLA) asking for rebates?

The Wall Street Journal reported that  Tesla Inc (NASDAQ: TSLA) asked around ten suppliers for rebates on projects that have yet to be completed. In response, Tesla Inc (NASDAQ: TSLA) denied this and claimed they are only asking for future price reductions. "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." a spokesman said adding, "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." The spokesman claimed that this was all to lower future expenditures and that changes would be positive. 

Tesla Inc (NASDAQ: TSLA) declined to provide the memo in question so the content is still in question and we only have the word of their spokesperson to go on. This isn't good enough for me. If Tesla Inc (NASDAQ: TSLA) wants to garner trust and really refute the reports they would have simply released the memo instead of taking the PR spin route. Compounding the issue the memo also brought to mind questions over the company's received government subsidies and how wisely those were used.

Furthermore, reports that model 3 cancellations are outpacing orders add to negative sentiment. Traders have taken notice of Tesla Inc (NASDAQ: TSLA) stock action and have started to pile on the short side. This has happened before however and shorts found themselves scrambling to cover. Previously, however, Tesla Inc (NASDAQ: TSLA) stock price wasn't inundated by so much bad publicity.   

To the contrary Tesla Model 3 car's have been receiving stellar reviews, and that bolsters the idea Tesla Inc (NASDAQ: TSLA) may indeed achieve profitability by the 3rd quarter of 2018. After all, they are a car company so that is what matters in the end. This is a small glimmer of hope that buyers can hold on to, however, Tesla is facing something else at this time it never faced before and that is competition. Toyota Motor Corp (NYSE: TM), Kia Motors Corporation (KRX: 000270), Ford Motor Company (NYSE: F), Bayerische Motoren Werke AG (ETR: BMW) and more have all launched fully electric vehicles now and Tesla Inc (NASDAQ: TSLA) is hardly the only company developing autonomous cars.

Alphabet Inc (NASDAQ: GOOGL), Cisco Systems, Inc. (NASDAQ: CSCO), and Delphi Technologies PLC (NYSE: DLPH) are a meager sampling of the companies exploring this field, and, by all measures, seem quite a bit further along than Tesla Inc (NASDAQ: TSLA) who has been reduced to assembling cars manually in tents to meet deadlines. Whether it was poor planning or bravado that led to this point indicators don't bode well for the company, and some traders have taken to calling it the big short of the year. Tesla Inc (NASDAQ: TSLA) still has time to turn things around but the outlook isn't very good.

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Comments (6)

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  • Tito
  • ,  Contributor
  • 24 July 2018, 12:07 pm

Tesla has some stiff competition

   0   Reply (0)   Follow(437)  

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    • Sammy
    • ,  Contributor
    • 24 July 2018, 11:07 am

    TSLA is giving buying a \"Lemon\" a whole new meaning.

       0   Reply (0)   Follow(437)  

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      The company is just like SodaStream... Save the world 1 plastic bottle at a time, make your own soda at home... Everyone gets one for Christmas, its cute for a couple minutes. However, eventually it\'s no longer interesting and no one buys another one.

         0   Reply (1)   Follow(437)  

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        • Tito
        • ,User
        • 24 July 2018, 11:07 am

        Not to mention Sodastream bottles are used to make crystal meth....

           0  

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          WSJ article today hints at TSLA need for $2 Billion cash

             0   Reply (0)   Follow(437)  

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            \n$TSLA has launched peer to peer car sharing. Another Tesla promise and failure goes tits up

               0   Reply (0)   Follow(437)  

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