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Tesla has asked some suppliers for cash back to help it become profitable

157 points by Puer 8y ago

Puer 8y ago
Outline link: https://outline.com/U6veCd https://outline.com/U6veCd
canada_dry 8y ago
Yikes, desperate times require desperate measures I guess! Considering that a) these suppliers already gave Tesla a deal based on promised volume, and b) these suppliers also have stock holders to account to... this seems like a Hail Mary pass. Perhaps an indication that Tesla is in much worse shape than Elon would like us believe.
- bhouston 8y ago
  It is a public company, everyone knows what shape it is in.
  - GW150914 8y ago
    Not necessarily... remember Enron?
    - dragontamer 8y ago
      Well, assuming everyone is following the law (and while Musk is eccentric... I don't see any reason to think that he's a criminal), we know what is going on inside of Tesla. Everyone knows the dates when Tesla's bonds are due. We all know Tesla has lost $300 million / quarter per quarter for the last few years. Etc. etc. etc. Its all public information and there doesn't seem to be any "cooking of the books" going on right now. In the case of Enron, it looked like a normal company but the executives were lying to the public. A few investors published articles noting that the numbers looked "off", which eventually prompted an investigation. Basically: if people lie, there's usually evidence in the numbers. Some numbers look wrong, certain things don't add up right, etc. etc. I've never heard of Tesla cooking the books.
- KaoruAoiShiho 8y ago
  If people have been following Tesla financials it's been clear that they're running out of money. Normally it's ok, everyone knows that Tesla is losing money and is not yet profitable. In 2018 running a money losing business for decades is totally expected and excusable if it's something as cool and fancy as electric cars. Tesla just needs to raise money from investors or the debt markets and there are plenty of people willing to toss more in the pit. However Elon kind of boxed himself in with some egoistical bs about promising not to raise any more money this year??? But why? Just freaking raise more money holy shit. As it is he's actually doing harm to the company and seeming actually desperate.
  - rjdagost 8y ago
    There's a lot of speculation as to why Elon claimed to not want or need additional capital raises. Some people claim there is an ongoing, undisclosed SEC investigation which prohibits them from issuing more shares. Others claim that parts suppliers will cut off credit unless they can show a sustained profit. Others claim that Moody's and S&P will cut Tesla's credit rating to "effectively in default" if they can't show a sustained profit this year, which will trigger institutional investors to dump their holdings. I have a feeling we will find out the real reason before too long.
    - Hypx 8y ago
      The answer might seriously be D) All of the above.
    - nradov 8y ago
      Credit rating agencies don't operate that way. They won't label a company as "effectively in default" unless a default is imminent and unavoidable. Credit ratings are based on ability to pay, not profitability. Tesla is in a precarious situation but far from actual default.
      - skgoa 8y ago
        Tesla is within 9 months of default, if things don't change dramatically. That's because in 9 month $900 million worth of bonds will have matured, which Tesla seems unable to refinance unless they raise capital, which Tesla seems unable to do for an unknown reason. Ratings agencies have highlighted this for a while now and have said explicitely that Tesla will have to show sustained, profitable production or their rating will be reduced to "practically junk". The situation is not quite at that stage yet, but it's not as far off as you make it seem, either.
sandworm101 8y ago
>> Tesla requested the supplier return what it calls a meaningful amount of money of its payments since 2016, according to the memo. Bullying plain and simple. This is not how you operate a successful company. Two things will happen: 1) Suppliers will send the money and in turn will keep prices higher in expectation that similar demands will be made in the future. Or 2) Suppliers will eat the losses, leaning out their own operations and risking interruptions. So by doing this Tesla will face either higher prices for future contracts, or increased unpredictability in their supply chain. The worst thing any company can do is get a reputation for unpredictable payment. It puts you are the bottom of everyone's friends list. Your orders will always be less important than everyone else's.
- deleted 8y ago
  [deleted]
arthurofbabylon 8y ago
Smart companies focus on the alignment of interests. This strikes me as a very smart move - it creates teamwork among players.
- TAForObvReasons 8y ago
  It's a great short-term move for Tesla to "ask for a refund for past work", but a horrible long-term strategy
  - PakG1 8y ago
    Which is why you only pull this card when you're desperate. Hopefully, you never have to do it again.
  - arthurofbabylon 8y ago
    Long term, could it instigate an awareness of interdependence for suppliers? (Sincere question)
fullshark 8y ago
Bankruptcy + acquisition by Apple forthcoming.
- bhouston 8y ago
  I think he would like to avoid the bakruptcy first aspect but getting into apple will help. I could see it Happening, especially after the beats acquition.
  - jshaqaw 8y ago
    A 1B Beats acquisition can be excused as a vanity play for Apple plus when they did that deal the company was still closer to “can do no wrong” status. A tens of billions investment into a money losing capex intensive industry would be a lot harder for Apple to sell to its shareholders.
    - Spooky23 8y ago
      Tesla seems like a company that is poorly operated. Apple is arguably the best manufacturer on the planet.
      - testrun 8y ago
        Are they a manufacturer? I am under the impression it is mostly outsourced to Foxconn.
        MBCook 8y ago
        It is, but obviously Apple designed everything to be extremely easy for them to manufacture at high volumes. That’s the kind of thing that Tesla seems to be having a lot of problems with.
        greglindahl 8y ago
        Tesla appears to have industry-leading battery packs, according to Sandy Munro. It's the whole car thing that appears to be more difficult for them.
bhouston 8y ago
If suppliers are going to finance the company should Tesla issue shares to them? It is this a supplier financing loan? Or just give back money so I can be your customer in the future? The only exception may be on electronics whose prices continually decrease, like screens, CPUs and other such things. Also these suppliers likely already has horrible payment terms like net 180 or at least that is what I saw in other similar vehicle manufacturers.
- bluedino 8y ago
  Supposedly the place I work at did the same thing about 15 years ago. They were close to closing the doors and started calling for suppliers and begging for discounts etc. It worked, they’re still in business today.
anilshanbhag 8y ago
This is just speculation. The story constantly says 'suppliers' when it is just one person at one supplier who has corroborated the story. "Some suppliers contacted about the request said they were unaware of such a demand." => They didn't find any other suppliers who had received the said memo.
- toomuchtodo 8y ago
  WSJ won’t even provide or quote the memo in question from their sole supplier source.
  - deleted 8y ago
    [deleted]
  - bjl 8y ago
    That's not at all surprising, though, that's how journalism has always worked (protecting one's sources). I certainly trust the WSJ over anything that comes out of Musk's mouth, especially after those pedo accusations.
    - PakG1 8y ago
      Musk has been a little weird these past few days. Like he really had time to go off to Thailand when he wasn't going to contribute in any way because at this late stage of the game, he definitely couldn't be a plan A, and there was only one shot given the rainfall timeline? This isn't the picture of the guy who sleeps on the factory floor to get them out of production hell. Besides that, he looked petty on Twitter. I know that he's always used Twitter for marketing but he looked dare I say Trumpesque.
      - griffordson 8y ago
        Every once in a while I feel exactly what many Trump voters claim to feel when I see/hear this attitude. If a guy like Musk gets shredded for being authentic and at times a bit manic seeming, then it's no wonder polite society is such a sham. Real people who do stuff in the real world have off days. They make mistakes that they genuinely regret not because they got caught, but because those incidents represent them at their worst and they strive to spend more time at their best. Let's all cut everyone a little slack. Hanlon's razor applies when dealing with humans, no matter what their IQ and accomplishments.
Proven 8y ago
Their (next and hopefully final) crash crunch can’t come soon enough - Mr Tony Stark has abused the taxpayer and gullible “investors” for way too long.
empath75 8y ago
Acting like trump on twitter and like trump in business. Maybe he can run for president and try to salvage the company that way.
bla2 8y ago
Remember the link recently that predicted Tesla shorts are about to unleash lots of negative press to make money? That's part of that. Edit: https://news.ycombinator.com/item?id=17521946 https://news.ycombinator.com/item?id=17521946
- ebikelaw 8y ago
  These short conspiracy theories are hilarious. All the available evidence points to a conspiracy by the sell side. They’re the ones with entire websites devoted to worshipping Tesla and Musk where words of skepticism are grounds for banishment. It all reminds me of my pal Adam Feuerstein who is a pharma analyst. There are hoards of people online who accuse him of being a puppet of the short side but all he does is publish true facts about drug trials. Just telling the truth is more than enough to be labeled a short shill by the people who are themselves very invested in the pump and dump.
  - pvg 8y ago
    hoards of people That sounds extremely uncomfortable.
  - SlowRobotAhead 8y ago
    >They’re the ones with entire websites devoted to worshipping Tesla and Musk where words of skepticism are grounds for banishment. It’s spelled: Reddit
- bsder 8y ago
  Um, wasn't there an article recently that the shorts are having trouble because nobody want to sell at any price? Tesla has a lot of assets and a bunch of people who committed cash to pledge that they would hand Tesla more cash, so it is a really profitable buyout target. A lot of the longs are basically thinking "Where else better would I park my money?" and coming up with "Nowhere."
a-dub 8y ago
American automakers have been financially whiffly-waffly for as long as I've been alive. It wouldn't surprise me one bit if this is industry standard for that industry. It also would be pretty smart to play that game given the bad press if it's possible by past precedent regardless of financial condition. It's also quite lucrative to publish these sorts of things about an industry darling with whiffs of smoke coming from a part of the world that gave us Theranos. So it could be good business on the part of Tesla. Or good business on the part of WSJ. Tesla could also be fucked. We shall see...
- rjdagost 8y ago
  I used to work in the automotive industry. It is common to push suppliers for price reductions on existing and future agreements. But I have never heard of partial refunds on past sales. This is not a smart game of chicken to play. If your suppliers don't think you are able to meet your obligations, they will rapidly cut you off from all credit (if not stop doing business with you all together). And if suppliers require upfront cash for parts deliveries then Tesla is in big trouble due to their high negative cashflow. Also, a move like this could trigger additional credit downgrades. Institutional investors (the main holders of Tesla stock) are much more likely to dump the stock if ratings agencies further downgrade Tesla's creditworthiness. I'd be surprised if Tesla were bluffing here- I think this is either pure desperation or "fake news".
  - Animats 8y ago
    It is common to push suppliers for price reductions on existing and future agreements. But I have never heard of partial refunds on past sales. Yes. The terms under which "New GM" took over the supplier contracts of "Old GM" come close. But that was a bankruptcy; the stockholders lost everything and the management lost their jobs. Tesla doesn't buy enough to bully many suppliers like that. If you sell Tesla bolts or tires or coils of aluminum, Tesla is a minor part of your business. Only if your business is making some custom part for Tesla can this work. Tesla does much of their custom stuff in-house, so there probably aren't many suppliers whose main customer is Tesla.
  - greglindahl 8y ago
AdamM12 8y ago
Read "PayPal Wars" loved it. Can't wait to read the 3-4+ books to come out from SpaceX & Tesla as time passes.
ww520 8y ago
Are the shorts gearing up for a push to depress the stock price?
- compcoffee 8y ago
  Are the longs gearing up for a push to increase the stock price? Nah,that could never happen....
  - ww520 8y ago
    Someone should do a ML on these news things to correlate the stock price movement with these news.
- Brotkrumen 8y ago
  Biased source but i found it an interesting read https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-sellers.118431/ https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-s...
- ww520 8y ago
  Ha. TSLA has dropped 12 points (4%) the next day.
alexandercrohde 8y ago
Why the f--- is this top of front page (second article today too)? It's a trivial signal about a freaking car company. I understand that a lot of people root for Musk, as a symbol of science defeating entrenched power. But it feels like there's some unexplained payload of negativity too, and I'd be curious where that's coming from...
tomhoward 8y ago
Non-paywall link: http://archive.is/sYGyZ http://archive.is/sYGyZ
- mseidl 8y ago
  You're doing the lord's work.
hndamien 8y ago
Maybe its a WSJ make good for shorts.
- compcoffee 8y ago
  I'm absolutely loving the fact that Musk's short whining has made its way to hacker News. Hilarious. Yes, its all a short seller conspiracy, not some terribly run company.
  - hndamien 8y ago
    It was a joke.
tzm 8y ago
Perhaps it's a simple question of obtaining credit for any supplier quality issues, which is common practice in automotive. No need for the author (or anyone here) to posture this as an act of desperation.
jlj 8y ago
In some industries, charegebacks are common when suppliers don't meet the terms of the contract. No PO number on the shipping label, late arrival, quality, or other T&C's. If that is not the case and this is strictly a financing agreement, I am not a CPA but skeptical that the cash back could be accounted as contra expense which would increase profit. It is definitely not revenue. It would probably end up on the balance sheet as an accounts payable like changing the payment terms would do. That helps cash flow but has no direct effect on profit. Article is paywalled and couldn't read it all, but curious what any finance and accounting experts could add. The headline doesn't quite sound right.
systemBuilder 8y ago
What if Tesla made a downpayment on parts at supply-rate XYZ (250,000 cars per year), and it turns out they will only do 200,000 cars this year? Wouldn't you ask for cash back on that downpayment?
- jonknee 8y ago
  Well that 100% depends on the contract. My hunch is if it was stated like that in the contract than they wouldn't be "asking" and this wouldn't be a news story. I don't know what kind of supplier would agree to that though, it would be a really sweet deal to reserve parts and then not have to actually you know buy them.
albertTJames 8y ago
big oil never stops trolling
- sctb 8y ago
  Could you please stop posting unsubstantive comments to Hacker News? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
mankash666 8y ago
Assuming WSJ reporting is accurate, Musk's singular focus needs to be on Tesla's profitability. All his other stunts, from the boring company to Thai submarines need to take a hiatus until he gets Tesla out of this trouble
- fouc 8y ago
  I thought this provided some interesting background https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-sellers.118431/ https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-s...
  - SmellyGeekBoy 8y ago
    This is absolutely fascinating, thanks for sharing.
  - slivym 8y ago
    That is worth taking with a massive pinch of salt. A lot of the 'evidence' and points made in that post are like reading tea leaves. To give one example: > In March 2018, short interest spiked to a new all time high, to its current levels. This coincided with the Moody's downgrade, and sudden questions over liquidity. Just as Tesla's most important product is about to ramp. Reality check: Tesla's target for mass production was December 2017. In March the deadline had been completely missed. In Q4 2017 they pushed the target to Q1 2018 and in march they pushed the target further back to Q2 2018.[1] They were producing around 1000 cars per week at that point. In March news was also coming in that Musk had just been granted an outrageous set of stock options that were going to be conditional on Market Cap - not production targets or profitability.[2] Not to mention the fact that at that point the plan for hitting the target had turned into a plan to build a tent city for car production, which doesn't seem likely to fill investors with confidence. You can say NOW that production was about to ramp up - but did this author buy in in March because he knew better than everyone else that production was about to successfully ramp? So that's the context of the actual production capabilities of Tesla, and then the other context you need is that Tesla is burning through cash and has a load of debt (not helped by the huge debt that SolarCity bought in). This is a material risk, and in March Moody's downgraded Tesla - which increases the cost of their borrowing, which again is perfectly expected to reduce the value of the stock. Especially when you consider that they have over 1B in debt maturing in the next 12 months and that needs to be rolled over at a time it looked possible they STILL wouldn't be producing 5,000 cars a week. This is one extremely charitable narrative about a set of facts that without the charged topic probably indicate a company with serious, but not insurmountable, problems. [1]:https://www.barrons.com/articles/when-will-tesla-hit-its-elusive-model-3-production-target-1528409384 https://www.barrons.com/articles/when-will-tesla-hit-its-elu... [2]:http://business-review.eu/news/elon-musk-set-to-receive-usd-2-6-bn-in-shares-from-tesla-if-milestones-are-met-162528 http://business-review.eu/news/elon-musk-set-to-receive-usd-...
solarkraft 8y ago
WSJ is not trustworthy on Tesla.
rwc 8y ago
"WSJ is not trustworthy on Tesla" comments make me think there would be quite a few people saying "WSJ is not trustworthy on Theranos" a few years ago..
londons_explore 8y ago
I don't really see how this works... Can I demand cash back from Amazon for all the stuff I bought last year? A 20% retroactive discount should do. If they don't give me that discount, I'm off to buy stuff from eBay!
- EpicEng 8y ago
  Well, perhaps if your purchases constituted some large majority of Amazon's sales. From what I read I doesn't seem like Tesla has that sort of leverage on their suppliers, but what the hell do I know.

157 points by Puer 8y ago

Puer 8y ago

Outline link: https://outline.com/U6veCd https://outline.com/U6veCd

Yikes, desperate times require desperate measures I guess! Considering that a) these suppliers already gave Tesla a deal based on promised volume, and b) these suppliers also have stock holders to account to... this seems like a Hail Mary pass. Perhaps an indication that Tesla is in much worse shape than Elon would like us believe.

bhouston 8y ago
It is a public company, everyone knows what shape it is in.
- GW150914 8y ago
  Not necessarily... remember Enron?
  - dragontamer 8y ago
    Well, assuming everyone is following the law (and while Musk is eccentric... I don't see any reason to think that he's a criminal), we know what is going on inside of Tesla. Everyone knows the dates when Tesla's bonds are due. We all know Tesla has lost $300 million / quarter per quarter for the last few years. Etc. etc. etc. Its all public information and there doesn't seem to be any "cooking of the books" going on right now. In the case of Enron, it looked like a normal company but the executives were lying to the public. A few investors published articles noting that the numbers looked "off", which eventually prompted an investigation. Basically: if people lie, there's usually evidence in the numbers. Some numbers look wrong, certain things don't add up right, etc. etc. I've never heard of Tesla cooking the books.
KaoruAoiShiho 8y ago
If people have been following Tesla financials it's been clear that they're running out of money. Normally it's ok, everyone knows that Tesla is losing money and is not yet profitable. In 2018 running a money losing business for decades is totally expected and excusable if it's something as cool and fancy as electric cars. Tesla just needs to raise money from investors or the debt markets and there are plenty of people willing to toss more in the pit. However Elon kind of boxed himself in with some egoistical bs about promising not to raise any more money this year??? But why? Just freaking raise more money holy shit. As it is he's actually doing harm to the company and seeming actually desperate.
- rjdagost 8y ago
  There's a lot of speculation as to why Elon claimed to not want or need additional capital raises. Some people claim there is an ongoing, undisclosed SEC investigation which prohibits them from issuing more shares. Others claim that parts suppliers will cut off credit unless they can show a sustained profit. Others claim that Moody's and S&P will cut Tesla's credit rating to "effectively in default" if they can't show a sustained profit this year, which will trigger institutional investors to dump their holdings. I have a feeling we will find out the real reason before too long.
  - Hypx 8y ago
    The answer might seriously be D) All of the above.
  - nradov 8y ago
    Credit rating agencies don't operate that way. They won't label a company as "effectively in default" unless a default is imminent and unavoidable. Credit ratings are based on ability to pay, not profitability. Tesla is in a precarious situation but far from actual default.
    - skgoa 8y ago
      Tesla is within 9 months of default, if things don't change dramatically. That's because in 9 month $900 million worth of bonds will have matured, which Tesla seems unable to refinance unless they raise capital, which Tesla seems unable to do for an unknown reason. Ratings agencies have highlighted this for a while now and have said explicitely that Tesla will have to show sustained, profitable production or their rating will be reduced to "practically junk". The situation is not quite at that stage yet, but it's not as far off as you make it seem, either.

sandworm101 8y ago

>> Tesla requested the supplier return what it calls a meaningful amount of money of its payments since 2016, according to the memo. Bullying plain and simple. This is not how you operate a successful company. Two things will happen: 1) Suppliers will send the money and in turn will keep prices higher in expectation that similar demands will be made in the future. Or 2) Suppliers will eat the losses, leaning out their own operations and risking interruptions. So by doing this Tesla will face either higher prices for future contracts, or increased unpredictability in their supply chain. The worst thing any company can do is get a reputation for unpredictable payment. It puts you are the bottom of everyone's friends list. Your orders will always be less important than everyone else's.

deleted 8y ago
[deleted]

arthurofbabylon 8y ago

Smart companies focus on the alignment of interests. This strikes me as a very smart move - it creates teamwork among players.

TAForObvReasons 8y ago
It's a great short-term move for Tesla to "ask for a refund for past work", but a horrible long-term strategy
- PakG1 8y ago
  Which is why you only pull this card when you're desperate. Hopefully, you never have to do it again.
- arthurofbabylon 8y ago
  Long term, could it instigate an awareness of interdependence for suppliers? (Sincere question)

fullshark 8y ago

Bankruptcy + acquisition by Apple forthcoming.

bhouston 8y ago
I think he would like to avoid the bakruptcy first aspect but getting into apple will help. I could see it Happening, especially after the beats acquition.
- jshaqaw 8y ago
  A 1B Beats acquisition can be excused as a vanity play for Apple plus when they did that deal the company was still closer to “can do no wrong” status. A tens of billions investment into a money losing capex intensive industry would be a lot harder for Apple to sell to its shareholders.
  - Spooky23 8y ago
    Tesla seems like a company that is poorly operated. Apple is arguably the best manufacturer on the planet.
    - testrun 8y ago
      Are they a manufacturer? I am under the impression it is mostly outsourced to Foxconn.
      - MBCook 8y ago
        It is, but obviously Apple designed everything to be extremely easy for them to manufacture at high volumes. That’s the kind of thing that Tesla seems to be having a lot of problems with.
        greglindahl 8y ago
        Tesla appears to have industry-leading battery packs, according to Sandy Munro. It's the whole car thing that appears to be more difficult for them.

bhouston 8y ago

If suppliers are going to finance the company should Tesla issue shares to them? It is this a supplier financing loan? Or just give back money so I can be your customer in the future? The only exception may be on electronics whose prices continually decrease, like screens, CPUs and other such things. Also these suppliers likely already has horrible payment terms like net 180 or at least that is what I saw in other similar vehicle manufacturers.

bluedino 8y ago
Supposedly the place I work at did the same thing about 15 years ago. They were close to closing the doors and started calling for suppliers and begging for discounts etc. It worked, they’re still in business today.

anilshanbhag 8y ago

This is just speculation. The story constantly says 'suppliers' when it is just one person at one supplier who has corroborated the story. "Some suppliers contacted about the request said they were unaware of such a demand." => They didn't find any other suppliers who had received the said memo.

toomuchtodo 8y ago
WSJ won’t even provide or quote the memo in question from their sole supplier source.
- deleted 8y ago
  [deleted]
- bjl 8y ago
  That's not at all surprising, though, that's how journalism has always worked (protecting one's sources). I certainly trust the WSJ over anything that comes out of Musk's mouth, especially after those pedo accusations.
  - PakG1 8y ago
    Musk has been a little weird these past few days. Like he really had time to go off to Thailand when he wasn't going to contribute in any way because at this late stage of the game, he definitely couldn't be a plan A, and there was only one shot given the rainfall timeline? This isn't the picture of the guy who sleeps on the factory floor to get them out of production hell. Besides that, he looked petty on Twitter. I know that he's always used Twitter for marketing but he looked dare I say Trumpesque.
    - griffordson 8y ago
      Every once in a while I feel exactly what many Trump voters claim to feel when I see/hear this attitude. If a guy like Musk gets shredded for being authentic and at times a bit manic seeming, then it's no wonder polite society is such a sham. Real people who do stuff in the real world have off days. They make mistakes that they genuinely regret not because they got caught, but because those incidents represent them at their worst and they strive to spend more time at their best. Let's all cut everyone a little slack. Hanlon's razor applies when dealing with humans, no matter what their IQ and accomplishments.

Proven 8y ago

Their (next and hopefully final) crash crunch can’t come soon enough - Mr Tony Stark has abused the taxpayer and gullible “investors” for way too long.

empath75 8y ago

Acting like trump on twitter and like trump in business. Maybe he can run for president and try to salvage the company that way.

bla2 8y ago

Remember the link recently that predicted Tesla shorts are about to unleash lots of negative press to make money? That's part of that. Edit: https://news.ycombinator.com/item?id=17521946 https://news.ycombinator.com/item?id=17521946

ebikelaw 8y ago
These short conspiracy theories are hilarious. All the available evidence points to a conspiracy by the sell side. They’re the ones with entire websites devoted to worshipping Tesla and Musk where words of skepticism are grounds for banishment. It all reminds me of my pal Adam Feuerstein who is a pharma analyst. There are hoards of people online who accuse him of being a puppet of the short side but all he does is publish true facts about drug trials. Just telling the truth is more than enough to be labeled a short shill by the people who are themselves very invested in the pump and dump.
- pvg 8y ago
  hoards of people That sounds extremely uncomfortable.
- SlowRobotAhead 8y ago
  >They’re the ones with entire websites devoted to worshipping Tesla and Musk where words of skepticism are grounds for banishment. It’s spelled: Reddit
bsder 8y ago
Um, wasn't there an article recently that the shorts are having trouble because nobody want to sell at any price? Tesla has a lot of assets and a bunch of people who committed cash to pledge that they would hand Tesla more cash, so it is a really profitable buyout target. A lot of the longs are basically thinking "Where else better would I park my money?" and coming up with "Nowhere."

a-dub 8y ago

American automakers have been financially whiffly-waffly for as long as I've been alive. It wouldn't surprise me one bit if this is industry standard for that industry. It also would be pretty smart to play that game given the bad press if it's possible by past precedent regardless of financial condition. It's also quite lucrative to publish these sorts of things about an industry darling with whiffs of smoke coming from a part of the world that gave us Theranos. So it could be good business on the part of Tesla. Or good business on the part of WSJ. Tesla could also be fucked. We shall see...

rjdagost 8y ago
I used to work in the automotive industry. It is common to push suppliers for price reductions on existing and future agreements. But I have never heard of partial refunds on past sales. This is not a smart game of chicken to play. If your suppliers don't think you are able to meet your obligations, they will rapidly cut you off from all credit (if not stop doing business with you all together). And if suppliers require upfront cash for parts deliveries then Tesla is in big trouble due to their high negative cashflow. Also, a move like this could trigger additional credit downgrades. Institutional investors (the main holders of Tesla stock) are much more likely to dump the stock if ratings agencies further downgrade Tesla's creditworthiness. I'd be surprised if Tesla were bluffing here- I think this is either pure desperation or "fake news".
- Animats 8y ago
  It is common to push suppliers for price reductions on existing and future agreements. But I have never heard of partial refunds on past sales. Yes. The terms under which "New GM" took over the supplier contracts of "Old GM" come close. But that was a bankruptcy; the stockholders lost everything and the management lost their jobs. Tesla doesn't buy enough to bully many suppliers like that. If you sell Tesla bolts or tires or coils of aluminum, Tesla is a minor part of your business. Only if your business is making some custom part for Tesla can this work. Tesla does much of their custom stuff in-house, so there probably aren't many suppliers whose main customer is Tesla.
- greglindahl 8y ago

AdamM12 8y ago

Read "PayPal Wars" loved it. Can't wait to read the 3-4+ books to come out from SpaceX & Tesla as time passes.

ww520 8y ago

Are the shorts gearing up for a push to depress the stock price?

compcoffee 8y ago
Are the longs gearing up for a push to increase the stock price? Nah,that could never happen....
- ww520 8y ago
  Someone should do a ML on these news things to correlate the stock price movement with these news.
Brotkrumen 8y ago
Biased source but i found it an interesting read https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-sellers.118431/ https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-s...
ww520 8y ago
Ha. TSLA has dropped 12 points (4%) the next day.

alexandercrohde 8y ago

Why the f--- is this top of front page (second article today too)? It's a trivial signal about a freaking car company. I understand that a lot of people root for Musk, as a symbol of science defeating entrenched power. But it feels like there's some unexplained payload of negativity too, and I'd be curious where that's coming from...

tomhoward 8y ago

Non-paywall link: http://archive.is/sYGyZ http://archive.is/sYGyZ

mseidl 8y ago
You're doing the lord's work.

hndamien 8y ago

Maybe its a WSJ make good for shorts.

compcoffee 8y ago
I'm absolutely loving the fact that Musk's short whining has made its way to hacker News. Hilarious. Yes, its all a short seller conspiracy, not some terribly run company.
- hndamien 8y ago
  It was a joke.

tzm 8y ago

Perhaps it's a simple question of obtaining credit for any supplier quality issues, which is common practice in automotive. No need for the author (or anyone here) to posture this as an act of desperation.

jlj 8y ago

In some industries, charegebacks are common when suppliers don't meet the terms of the contract. No PO number on the shipping label, late arrival, quality, or other T&C's. If that is not the case and this is strictly a financing agreement, I am not a CPA but skeptical that the cash back could be accounted as contra expense which would increase profit. It is definitely not revenue. It would probably end up on the balance sheet as an accounts payable like changing the payment terms would do. That helps cash flow but has no direct effect on profit. Article is paywalled and couldn't read it all, but curious what any finance and accounting experts could add. The headline doesn't quite sound right.

systemBuilder 8y ago

What if Tesla made a downpayment on parts at supply-rate XYZ (250,000 cars per year), and it turns out they will only do 200,000 cars this year? Wouldn't you ask for cash back on that downpayment?

jonknee 8y ago
Well that 100% depends on the contract. My hunch is if it was stated like that in the contract than they wouldn't be "asking" and this wouldn't be a news story. I don't know what kind of supplier would agree to that though, it would be a really sweet deal to reserve parts and then not have to actually you know buy them.

albertTJames 8y ago

big oil never stops trolling

sctb 8y ago
Could you please stop posting unsubstantive comments to Hacker News? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

mankash666 8y ago

Assuming WSJ reporting is accurate, Musk's singular focus needs to be on Tesla's profitability. All his other stunts, from the boring company to Thai submarines need to take a hiatus until he gets Tesla out of this trouble

fouc 8y ago
I thought this provided some interesting background https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-sellers.118431/ https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-s...
- SmellyGeekBoy 8y ago
  This is absolutely fascinating, thanks for sharing.
- slivym 8y ago
  That is worth taking with a massive pinch of salt. A lot of the 'evidence' and points made in that post are like reading tea leaves. To give one example: > In March 2018, short interest spiked to a new all time high, to its current levels. This coincided with the Moody's downgrade, and sudden questions over liquidity. Just as Tesla's most important product is about to ramp. Reality check: Tesla's target for mass production was December 2017. In March the deadline had been completely missed. In Q4 2017 they pushed the target to Q1 2018 and in march they pushed the target further back to Q2 2018.[1] They were producing around 1000 cars per week at that point. In March news was also coming in that Musk had just been granted an outrageous set of stock options that were going to be conditional on Market Cap - not production targets or profitability.[2] Not to mention the fact that at that point the plan for hitting the target had turned into a plan to build a tent city for car production, which doesn't seem likely to fill investors with confidence. You can say NOW that production was about to ramp up - but did this author buy in in March because he knew better than everyone else that production was about to successfully ramp? So that's the context of the actual production capabilities of Tesla, and then the other context you need is that Tesla is burning through cash and has a load of debt (not helped by the huge debt that SolarCity bought in). This is a material risk, and in March Moody's downgraded Tesla - which increases the cost of their borrowing, which again is perfectly expected to reduce the value of the stock. Especially when you consider that they have over 1B in debt maturing in the next 12 months and that needs to be rolled over at a time it looked possible they STILL wouldn't be producing 5,000 cars a week. This is one extremely charitable narrative about a set of facts that without the charged topic probably indicate a company with serious, but not insurmountable, problems. [1]:https://www.barrons.com/articles/when-will-tesla-hit-its-elusive-model-3-production-target-1528409384 https://www.barrons.com/articles/when-will-tesla-hit-its-elu... [2]:http://business-review.eu/news/elon-musk-set-to-receive-usd-2-6-bn-in-shares-from-tesla-if-milestones-are-met-162528 http://business-review.eu/news/elon-musk-set-to-receive-usd-...

solarkraft 8y ago

WSJ is not trustworthy on Tesla.

rwc 8y ago

"WSJ is not trustworthy on Tesla" comments make me think there would be quite a few people saying "WSJ is not trustworthy on Theranos" a few years ago..

londons_explore 8y ago

I don't really see how this works... Can I demand cash back from Amazon for all the stuff I bought last year? A 20% retroactive discount should do. If they don't give me that discount, I'm off to buy stuff from eBay!

EpicEng 8y ago
Well, perhaps if your purchases constituted some large majority of Amazon's sales. From what I read I doesn't seem like Tesla has that sort of leverage on their suppliers, but what the hell do I know.