Tesla shares are lower Monday amid a flurry of reports the US-based electric car maker is requesting refunds from some of its suppliers. The move is thought to be a bid to ensure the company turns a profit this year.
The initial report came from the Wall Street Journal, Sunday, citing a memo sent to the publication by a global supply manager.
By 1440 BST, Tesla shares were 5.48% lower at $296.41. The stock has moving broadly lower in recent weeks, despite positive reviews of the Model 3.
Tesla supplier refund requests
While Tesla reached its goal of producing 5,000 Model 3’s per week by the end of the second quarter, that effort has required a hefty cash burn rate. And, in order to achieve another target – to become profitable by the end of 2018 – Elon Musk’s business still has a lot of work to do.
And it appears that one way it is planning on becoming profitable by the end of this year, is to request refunds from some suppliers.
According to the WSJ report, based on the memo its reports have seen, Tesla said the supplier cashback request was “essential to Tesla’s continued operation”.
The article also included a comment from Tesla, stating that the memo was simply one element of standard procurement procedures.
Praise for the Model 3
While the car maker continues to work on delivering the profit it promised, last week proved a high point for Musk’s business as reviewers gave a resounding thumbs-up for the Model 3.
A number of reviewers said the Performance version of the Tesla Model three was a great development and that the Model 3 remains the best Tesla car for drivers.
One review in Electrek was titled: “For many, this will be the best car at any price.”