- Tesla asked suppliers for a refund in order to help it become profitable, the Wall Street Journal reported Sunday.
- Shares fell more than 4% after the report.
- Follow Tesla’s stock price in real-time here.
The memo, from a global supply manager, said the cash back was “essential to Tesla’s continued operation,” the WSJ said, telling the supplier to consider the refund an investment in the company’s long-term health.
Shares of the company fell more than 4% in early trading Monday following the report.
Tesla’s cash position is front of mind for investors right now. 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. On July 1, the company said it reached its goal of producing 5,000 Model 3 sedans – its newest vehicle – just hours after its self-imposed deadline, making it a “real car company,” according to CEO Elon Musk.
If sustained, that production rate could lead to a healthy earnings report when Tesla releases its second-quarter results on August 1. The electric-car maker has vowed to turn a profit by the end of the year.
Still, many Wall Street analysts remain unconvinced that profitability will come by the stated deadline, and have factored in a capital raise into their models.
A company spokesperson told the Wall Street Journal the memo was part of standard procurement procedures, but offered no further comment.
Business Insider has reached out to Tesla for comment on the Wall Street Journal report and will update this post if a statement is received.
Tesla is down about 5% this year.
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