Tesla investors again worry over carmaker's finances following report company asked suppliers for refunds to help turn profit

Tesla's finances rather than its cars were once again in focus today following a report that the company asked suppliers for refunds to help it turn a profit.

A memo provided to The Wall Street Journal showed the electric car maker asked one supplier to return what it calls a meaningful amount of money on its payments since 2016.

The Tesla Motors World Headquarters in Palo Alto.
The Tesla Motors World Headquarters in Palo Alto. Source: istock.com

The memo came from a global supply manager and said the request was essential to Tesla's continued operations, the Journal said.

The report also said it's not clear how many suppliers received the request.

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 company said it is also talking to suppliers about changes to future prices and design that will help it reduce costs.

Tesla stock fell 3.3 per cent to $445.35 today in heavier than normal trading.

The stock is down from a peak of $567.44 in September, with many investors growing concerned about Tesla's spending and its ability to meet its production goals.

Tesla is spending about $1.47 billion a quarter as it ramps up manufacturing of the Model 3 sedan, a lower-priced car that is key to Tesla's plans of becoming a major mass-market automaker.

The 15-year-old company has reported only two quarterly profits in its history and has never made a profit for a full year.

Efraim Levy, a senior equity analyst for CFRA, said he found Tesla's request unusual.

"I haven't heard of this being done before and I've been following the industry for 20 years," he said.

"It sounds like something that happens when you're struggling."

Itay Michaeli, an analyst for Citi Investment Research, said automakers sometimes ask for discounts from suppliers, but those are relatively minor matters.

He said it's more serious if the company needs more cash to continue operating, noting that investors are likely to be concerned if Tesla has to take unusual steps to shore up its finances.

Tesla had $3.9 billion in cash on hand at the end of the first quarter and many experts think it will need to raise money soon.

CEO and top shareholder Elon Musk has said that Tesla intends to become profitable in the second half of 2018, and analysts said today that the memo is an attempt to meet that goal.

But they said if Tesla has to try this hard to meet its target, it might be a self-defeating effort.

In June the company said it was eliminating 3,600 jobs, or 9 per cent of its staff, as part of a restructuring effort.

The electric car company’s newest vehicle, the Model 3.
The electric car company’s newest vehicle, the Model 3. Source: Associated Press

At the beginning of July the company said it met a long-time target of building 5,000 Model 3s in a week, but industry analysts have questioned whether Tesla can sustain that pace.

speaks onstage at Elon Musk Answers Your Questions! during SXSW at ACL Live on March 11, 2018 in Austin, Texas.
Tesla CEO Elon Musk. Source: Associated Press



US woman appeals conviction for housing 84 sick Great Danes in filthy mansion

Lawyers for a woman convicted of housing dozens of filthy and sick Great Danes in her New Hampshire mansion have filed a notice of appeal with the state Supreme Court.

Christina Fay was sentenced on 17 animal cruelty charges earlier this year.

A judge ruled she will serve no jail time, but is responsible for paying back nearly $2 million for care of the dogs until they find new homes.

Authorities seized 84 dogs from Fay's Wolfeboro home last year.

They said the animals were living in filth and suffering from health problems.

Fay said she wanted to be the primary US collector of European Great Danes and had been acquiring and breeding them since 2014.

Fay's lawyers are questioning barred testimony, rejected dismissal arguments, the restitution amount and other matters.

3 years old black big dog
Sliding around on their own faeces, the 84 Great Danes were suffering from eye problems, skin conditions and viral infections when found by the Humane Society of the United States. Source: istock.com

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Watch: The dramatic moment a 12-storey building collapses, injuring one person in the US

Police say a 12-storey building on Miami Beach that was slated to be torn down has collapsed, injuring one person.

Miami Beach police officials tweeted that the victim was taken to Jackson Memorial Hospital in Miami this morning.

A condition report wasn't immediately available.

Police said in a tweet that the building had "a demolition permit, not an implosion permit."

The 12-story Marlborough House was to be torn down for construction of a new oceanfront condominium.

Traffic was closed in the area.

No other details were immediately available.

The Miami Beach condo was to be torn down for construction of a new oceanfront condominium. Source: Associated Press