Tesla asks suppliers for money back on Model 3 parts

A Tesla sign at a showroom

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However, in a statement released later on Monday, a spokesman for Tesla said it had asked "fewer than 10 suppliers for a reduction in total capex project".

The Journal reported that Tesla had turned to some suppliers for a refund of previously made payments in a bid to turn a profit, citing a memo sent by a Tesla global supply manager. Tesla has repeatedly said it will become profitable by the end of 2018, but has struggled amid production issues that have plagued its Fremont, California assembly line.

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While certainly an ambitious goal given Tesla's history, there's reason to believe that Musk's promise might actually pan out. Tesla held about $3.2 billion in cash after the first three months of the year, having spent about $1 billion through March.

It's 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.

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This strategy is part of a plan announced previous year where Tesla was able to negotiate longer payment terms to about 60 days for Model 3 parts, which would allow the auto maker to make the vehicle and get paid for it before the bill is due to suppliers. It suggested that all Tesla suppliers were being asked to make partial refunds, but some of the companies that the WSJ talked to denied any knowledge of such a request.

Tesla did not immediately respond to a request for comment from CNNMoney. It is spending about $1 billion a quarter as it ramps up manufacturing of the Model 3 sedan, a lower-priced auto that is key to Tesla's plans of becoming a major mass-market automaker. Even though Tesla is making more of the sedans, the company won't complete delivery and collect revenue for many of them until the third quarter, Whiston said.

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Tesla shares pared losses and were down 2.7 percent at $305.01. "It would not be correct to apply historical cost savings to current quarter", Musk tweeted.

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