Another tweet from Elon Musk, and Tesla stock is tumbling.
Shares are down more than 3% after The Wall Street Journal reported that Tesla is asking some suppliers for partial refunds, another sign of a cash crunch at the company.
The news came as Tesla CEO Elon Musk settled a lawsuit over a tooting unicorn.
Tesla burned through $700 million in cash last quarter, and its cash reserves dipped 20%. Analysts say Tesla needs to sell a lot more cars. Musk has pushed back on naysayers, arguing that the company will be profitable this quarter and next.
The Journal cited a memo from a manager to a supplier, saying that all suppliers are being asked to help Tesla become profitable.
Musk, Tesla’s co-founder and CEO, confirmed on Twitter that Tesla is asking for money from its suppliers.
He wrote early Monday: “Only costs that actually apply to Q3 & beyond will be counted. It would not be correct to apply historical cost savings to current quarter.”
Tesla did not immediately respond to a request for comment from CNNMoney. The Journal said Tesla confirmed that it is “seeking price reductions from suppliers for projects, some of which date back to 2016, and some of which haven’t been completed.”
Tesla in late June finally hit an important production target for the Model 3, its most accessibly priced electric car.
Analysts are also concerned about erratic tweets from Musk. He has lashed out at journalists for critical coverage of Tesla, and earlier this month he tweeted an unfounded and disparaging claim about a cave diver who participated in the rescue of a Thai soccer team.
The plea raises questions about the company’s cash position, which has dwindled following some production issues.
A memo provided to the newspaper shows Tesla requested the supplier return what it calls a meaningful amount of money on its payments since 2016. The memo said all suppliers were being asked to help the company become profitable.
The electric car company declined to comment on the specific memo but confirmed that it is seeking price reductions from suppliers for projects, some of which date back that far.
Supply-chain consultants told the paper that sometimes automakers will demand a reduction in price for a current contract going forward or use leverage of the promise of a new deal to get upfront savings. But they say it is unusual for an auto maker to ask for a refund for past work.
“It’s simply ludicrous and it just shows that Tesla is desperate right now,” Dennis Virag, a manufacturing consultant who has worked in the automotive industry for 40 years, told the paper.
Tesla has been burning cash at a rate of about $1 billion a quarter and finished the first quarter with $2.7 billion in cash on hand. But it has struggled to balance its desire for growth with the expense of launching new vehicles and building out infrastructure to support its business.
Musk, artist settle copyright row over tooting unicorn
Tesla and SpaceX CEO Musk and an artist have settled a row over a farting unicorn.
Musk in February tweeted a photo of a mug made by Colorado potter Tom Edwards that showed a tooting unicorn powering an electric vehicle. Edwards initially thanked Musk for the exposure.
But the artist got upset after Musk used the unicorn image to promote Tesla’s sketch page feature and put the graphic in the automobiles’ operating systems.
The Washington Post reports Edwards’ lawyer asked Tesla in a letter in May to compensate the artist.
Musk on Saturday tweeted a link to a post on Edwards’ website, which declared the “Copyright issue: RESOLVED!” Edwards said the agreement with Tesla “resolves our issues in a way that everyone feels good about.”
