Tesla shares plummet after reportedly asking suppliers for cash rebates

Outside the Tesla showroom in Newport Beach California

When asked whether the company has requested refunds from suppliers, a Tesla spokesman referred to a company statement, which said Tesla had asked fewer than 10 suppliers for a reduction in total spending on projects that started in 2016 and are not complete.

The Wall Street Journal sites a Tesla memo, in which the carmaker asked its major supplier to refund some money Tesla had paid earlier.

Tesla probably has some leverage to gain suppliers' support, given that the type of parts it uses is probably a bit different from other automakers and it may even be the only customer in some cases, said Koji Endo, an auto analyst at SBI Securities Co.in Tokyo.

The company experienced a similar shares fall last week, as a result of a tweet from Musk that labelled a British diver assisting in a rescue effort in Thailand as a "pedo guy".

Tesla is due to report second-quarter earnings after the stock market closes on August 1. If a company needs to request money back from its supplier to achieve profitability, that doesn't seem like a sustainable business model.

"This is troubling for us to hear", said Morningstar analyst David Whiston in a note to clients.

Former U.S. Ambassador To Russia Opposed to Joint Interference Investigation
It shows frankly the outrageousness and the just desire to find the negative in everything that this President does, she said. Sanders also addressed how the administration is working to prevent Russian meddling in US elections in the future.

Tesla did not respond to a BBC request for comment. In the first quarter, as the company was pushing to get the Model 3 production line going, it went through more than $1 billion, according to data compiled by Bloomberg.

Chief executive Elon Musk has said that Tesla will reach a profit in 2018's second half.

While the WSJ reported the memo as saying that all suppliers were being asked to help the company become profitable, it said it had contacted a number of suppliers who said they were unaware of such a demand.

Tesla had previously experienced serious production delays on its Model 3, which reportedly also impacted its supplier. "It would not be correct to apply historical cost savings to current quarter".

Tesla shares pared losses and were down 2.7 percent at $305.01.

Instead, he has told investors that he expects the firm to turn a profit in the third quarter of this year.

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