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.
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".
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.
You're reading a lot into the article that isn't necessarily there. The WSJ didn't confirm that it knew of more than one supplier that was contacted, and Tesla's comment:
> But it confirmed it is seeking price reductions from suppliers for projects, some of which date back to 2016, and some of which final acceptance many not yet have occurred.
is quite ambiguous -- was that really a partial refund on past sales of parts for production cars? Or was it arm twisting related to failed or incomplete "projects"?
I don't know the answer, and I see a lot of people in this discussion being pretty enthusiastic about thinking they do know.
I used to work for Champion Spark Plug 20 years ago. Chrysler asked us for price reductions every quarter. It got to the point where the engineer assigned to Chrysler hung up the phone one day and said "Fuck it. I'm just going to tell them to get bent because we're already selling them sparkplugs at a loss. What's the worst that could happen? We go out of business? They're already forcing that situation."
"Tesla declined to comment on the specific memo. But it confirmed it is seeking price reductions from suppliers for projects, some of which date back to 2016, and some of which haven’t been completed."
The Wall Street Journal is one of the most reputable sources for business journalism. Claiming that they would publish this article without proper vetting is ridiculous and equating it to "fake news" is shameful.
A few months ago the WSJ reported that the aerospace supplier Woodward was in talks to be acquired by Boeing. [1]
After the market closed, Woodward came out and categorically denied the WSJ's report, saying that it was not in talks. Period.
Its not necessarily nefarious, but the WSJ does in fact publish stories that rely on questionable sources. It's absolutely not out of the question that that could have happened here as well.
Note that since [1] was published, Woodward has not been acquired by Boeing, and its stock took a dive after the WSJ's poorly sourced story caused the stock to shoot up ~10% when it published. A lot of people that bought it on the WSJ's bad report lost a lot of money.
This isn’t about a proposed deal not closing. This is about a proposed deal being reported as such, when in fact there had not ever been deal talks in the first place.
"Tesla declined to comment on the specific memo. But it confirmed it is seeking price reductions from suppliers for projects, some of which date back to 2016, and some of which haven’t been completed."
Also, if you're going to create throwaway accounts just to comment you might want to remember which one you're logged into.
Just because the company denied the report it doesn't necessarily mean it wasn't true. Companies deny things all the time in accordance to whatever suits their current interests.
"Several hours after The Wall Street Journal reported on the talks, Woodward issued a news release saying that it “is not in discussions with Boeing over a possible acquisition of Woodward... After the statement, the people familiar with the matter said the companies remained in talks."
The Wall Street Journal has a long history of thorough research and well-respected publications. There's no doubt that the vetting process for industry sources is extensive. Remember when a right wing group tried to approach the Washington Post with a fake story and how quickly they were able to expose it? It's entirely possible for sources to give occasionally incorrect or unreliable information based on changing events, but the notion that the WSJ consistently relies on "questionable sources" is ignorant of how extensive the process is.
Just because it isn't transparent (which is precisely to protect the quality of their sources) it doesn't mean it isn't reliable.
> The Wall Street Journal has a long history of thorough research and well-respected publications.
This is a bullshit appeal to authority.
Let's be very clear about the process:
* The WSJ reports the claims of anonymous sources. It bases entire reports off these claims and makes no effort to provide verifiable evidence of what it is reporting.
* When called on the sordid affair the WSJ and its defenders insist the paper is a serious journalist effort.
This happens over and over at major American newspapers to the extreme detriment of the American people. And yet, here we are again in 2018.
Here's an idea: instead of appealing to authority why not provide evidence? Why not make the sources go on record? Or provide verifiable evidence of the source's anonymous claims? Isn't this what journalism actually is?
Keep in mind that John Carreyou’s sources for the Theranos articles faced actual 24/7 surveillance, and received legally threatening letters from one of the country’s top law firms (Boies Schiller).
This is not to say that Musk would definitely do such a thing. However, the employee(s) who talked to the WSJ are risking personal legal liability for talking to a journalist.
Any journalist worth their salt is going to allow sources to go on “deep background” when appropriate.
I write all this as a soon to be Tesla customer. Yes, asking for manufacturer rebates is not completely unheard of, but it’s also the case that this very rarely happens.
If you’re thinking there’s a conspiracy, keep in mind the WSJ’s auto reviewer just published an overwhelmingly positive review of the Model 3 this week, which Musk retweeted.
US libel and defamation law puts newspapers in legal jeopardy if they intentionally publish false information (https://en.wikipedia.org/wiki/New_York_Times_Co._v._Sullivan). News Corp has a couple billion reasons to let the WSJ’s newsroom do a thorough and honest job.
[citation needed] is one of the best things that happened to wikipedia and it could stand to show up in more places. I'm amazed internet journalism doesn't use citations. It's not like there's a lack of space like print papers.
The source may not be anonymous to the WSJ (we the readers have no insight as to whether or not the source was anonymous), but articles like this where WSJ was unable to find a second source shouldn't be published as journalism. Uncorroborated hearsay does not make for a proper, publishable news article.
It's disingenuous to associate yourself as a "reader" when you evidently didn't read the article carefully:
"Tesla declined to comment on the specific memo. But it confirmed it is seeking price reductions from suppliers for projects, some of which date back to 2016, and some of which haven’t been completed."
The second source the WSJ found was Tesla itself. Uninformed assertion does not make for a proper, useful Hacker News comment.
That's why they don't publish 'uncorroborated hearsay'. You are just calling it that. We the readers have a pretty decent idea what standards major newspapers adhere to. It's a minor exercise in reading to get familiar with them if you personally happen not to be.
Tesla confirmed something but from that statement it is impossible to determine they confirmed that they are looking cash back from past contracts. It can be read that Tesla confirmed they are looking for price reduction of current contracts some of which may have been established in 2016 but the terms of which have not completed. If suppliers have failed to fully deliver as required under the contracts such as meeting quality or timeline terms it would not be unusual for Tesla to go back to the suppliers to ask for a refund.
Maybe they were in talks and it fell apart? That happens a lot and the company doesn't always confirm it publicly. Nothing you have said is surprising at all.
Reputability should never be reason not to question something. There's a name for that and it's appeal to authority.
Is Reuters reputable enough to question the sensationalism in WSJ? http://blogs.reuters.com/felix-salmon/2010/02/26/the-sensati...:
"In any case, it’s clear from the photograph and the two main stories on the WSJ’s front page that the paper is aggressively becoming both sensationalist and political. That might be a sensible move, from the point of view of selling copies, especially on the newsstand. But it will also inevitably serve to erode the trust that many people, on Wall Street especially, have in the reporting of the WSJ."
Wall Street Journal is reputable and I subscribe to it. It is probably the best one for US business news.
However it has a long history of publishing sensationalist articles especially about Tesla. I remember the articles about executives stepping away, NTSB probes, yellow lines, bankruptcy ... The recent article by Dan on how good Model 3 is is the only positive article I remember on WSJ about Tesla.
> I remember the articles about executives stepping away, NTSB probes, yellow lines, bankruptcy ... The recent article by Dan on how good Model 3 is is the only positive article I remember on WSJ about Tesla
Do you remember any of them being factually incorrect?
You are implying bias, where I see a troubled company.
Can you name another instance where the WSJ wrote negatively about a company and it turned out to be false? As a subscriber, why the sudden skepticism?
Andy Pasztor published unfounded speculation that the highly classified Zuma mission was a SpaceX failure.[0] It certainly was not and is believed to be a Northrop Grumman failure.[1]
There was a time when the WSJ wrote over and over articles with a negative slant about Apple, before Jobs came back. They would always describe them as "beleaguered" and similar terms. For some reason the "party line" changed, and it was quite striking to me. While it's undeniable that Apple was turned around, the sense of a manipulated narrative never left me. And while I don't trust Rupert Murdoch, this was before his involvement.
Apple was beleaguered before Steve came back. That's why he came back! They very nearly went out of business, you can't get much more beleaguered than that.
Apple wasn't levered though. To this day, many people will tell you they were on the brink of bankruptcy. The "beleaguered" stuff was self-reinforcing judgement of their product line and its prospects.
It is possible to be extremely biased against an entity that has real issues, just like a paranoid can have real enemies.
I'm coming from the perspective of having read Apple's annual SEC filings back in the day and noted what a huge amount of cash they had stockpiled even in their doldrums.
Apple would never have survived if they had not been run so conservatively, which speaks to the efforts of people other than Jobs and Gates.
At the end of 1997 their 10-K says they had around $1.4B dollars in cash, and around $900M in long term debt.
The 2000 10-K shows they had $4 billion in cash and short term investments compared to $300 million in long term debt.
> The Wall Street Journal is one of the most reputable sources for business journalism. Claiming that they would publish this article without proper vetting is ridiculous and equating it to "fake news" is shameful.
So WSJ is beyond reproach and criticism? WSJ has had problems in the past with their reporting. Nobody is beyond reproach, especially a company owned by rupert murdoch.
If you have an issue with the guy's comment, why not point that out instead of attacking him for being "shameful" for criticizing the wsj?
Yes, the WSJ does make mistakes and, like all human creations, has some degree of underlying bias. However, it is generally a reliable and quality source of information.
The parent comment was edited so of course there's no way you could have known, but it had previously equated the WSJ to being no better than "fake news." I think a fair interpretation of "fake news" is inflammatory information that's intentionally misleading and has no ties to any sort of reality.
In this age of misinformation, I think it's important to support and recognize quality sources of information and education. Comparing the WSJ to a fake news publication is disrespectful and ignorant and I think it's worth calling out.
> The parent comment was edited so of course there's no way you could have known, but it had previously equated the WSJ to being no better than "fake news."
I didn't realize he said WSJ is fake news. That is a bit hyperbolic but that's his opinion and he's certainly entitled to it.
> In this age of misinformation, I think it's important to support and recognize quality sources of information and education
In the age of misinformation, it is more critical that we hold a light to established news sources. Especially those that people blindly accept on faith.
> Comparing the WSJ to a fake news publication is disrespectful and ignorant and I think it's worth calling out.
So what if it was disrespectful? That's his opinion. Why attack him for it? Should he attack you for blindly accepting the WSJ?
WSJ is just a company. Why are you so offended? There's plenty the WSJ did for people to disrespect it. Obviously there's plenty they did for you to respect it. Whatever happened to respecting each other opinions?
You can disagree with him without calling him ignorant and attacking the guy.
I don't see anything in those guidelines that I've violated. Is there any hope that you might be more specific?
All of my comments include supporting evidence whenever possible. They are not vague or dismissive. They are certainly not flamebait meant to spark flamewars.
"bullshit appeal to authority" "sordid affair" "the extreme detriment of the American people" "It is fake news" "Iraqi war and the deaths of hundreds of thousands of innocent people" "Seriously, grow up." https://www.youtube.com/watch?v=29M_VElHoFI
This is all about some fairly basic reporting about a car manufacturer and its suppliers.
They are doing it with everything lately though. I agree with the original post. It's classier, but completely aligned with MAGA. They put a nicer face on it which is scary. I prefer my Nazis to be recognizable for the monsters they really are.
Not necessarily refunds. It could be about bills they didn’t pay yet, for example because they had to be paid within 30 or 60 days, and that period hasn’t passed yet.
Asking “do you want 95% now or see whether we can pay back 100% in 20 days, when we have to pay you?” is fairly standard practice for companies that are running low on cash.
If all parties involved think there’s a >5% chance they won’t be able to eventually pay back, the rational thing to do is to accept that offer. Also, the first to accept the offer is more likely to get the money.
(But _if_ the end result is bankruptcy, the trustee appointed might order you to pay back that money, so that debtors who have more rights to be repaid can be paid back with it)
That's what the article is claiming, but not what Tesla is confirmed though, which is what this thread started with. Tesla's statement says no such thing.
They have a memo, they talked to Tesla who do not appear to challenge their narrative. Plus, it's a business story in the WSJ, not some random blog post.
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.
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.
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.
Musk has hasn't just had a bad day. He's made a whole series of colossal strategic errors in stubborn defiance of conventional wisdom over the past couple years. The pedo comment is just the cherry on the tip of the iceberg. The delusional mini-sub stunt wonderfully encapsulates his whole approach to running the company. For years I've just been shaking my head as people try to rationalize his bullshit over and over, but those chickens are coming home to roost.
You seem to be referring to the erroneus and hostile narrative on the thai sub thing. Apparently Elon was in contact with the people leading the rescue and seemed to be level headed and cautious and courteus in dealing with them and approaching the situation when he offered to help, as can be seen from the tweets and what appear to be email exchanges between someone close to the rescue team and him. Of course he capitalized on the publicity but he it seems like his effort was trying to do good and did not impede the rescue efforts as far as I can tell.
The pedo thing was a stupid mistake stemming from anger that got lit up by accusations by someone criticizing what Elon probably perceived as sincere offer of help, and he says to have later apologized.
He's not a normal person. He's the CEO and face of a multi-billion dollar company. It comes with the territory to be held to a higher standard. He did the right thing with the apology. That doesn't mean he didn't screw up. We are allowed to talk about when people screw up, especially if they're the CEO and face of a multi-billion dollar company. At the very least, it's an opportunity for us to dissect and learn. At the very worst, it can affect investment decisions and people's livelihoods.
This story is such bullshit. It smells like someone's stuck in a short position over Tesla stock and wants to create a dip in it...maybe it's the same guy Elon insulted on that last quarterly earnings call.
You could say the same thing about any business article the WSJ publishes--all sorts of people have potential gains and losses with any business news. That doesn't make it untrue. You haven't even read the story and yet call it fake news. It sounds to me that you're the one living in a fake news world where it's not the facts that matter, but the source.
Telsa is on record saying that it's true, so what exactly is fake?
> Tesla declined to comment on the specific memo. But it confirmed it is seeking price reductions from suppliers for projects, some of which date back to 2016, and some of which haven’t been completed. The company called such requests a standard part of procurement negotiations to improve its competitive advantage, especially as it ramps up Model 3 production.
What Tesla confirmed is nothing more than standard business practice—and indeed good business practice. You should always be questioning whether your suppliers are giving you their best possible price.
Yea. You don't see me trying to break it down do you?
There's a very clear pattern of headlines about a potential Tesla doomsday that's almost always rooted in rumors or anonymous tips...and guess what...sometimes you look up the analyst and find that they're openly shorting Tesla.
This article is sensationalized. We all now know that this is standard industry practice yet the article strongly implies that without these retroactive discounts, Tesla won't be able to stay afloat. What did we find out since this garbage publication? That the discounts they're asking for aren't as retroactive as the original article claimed, and the consequences are completely baseless.
I'm just pointing out this aggressive pattern of Tesla shorters taking these rumors and running wild with them. I don't need to read every unfounded rumor to comment on it.
If I was more savvy, I would look into today's selloff and see if that analyst Elon made fun of on the earnings call finally dumped his borrowed shares but that's way too much effort to justify my internet comment.
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
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.
Yes. Tesla's bond repayment schedule explains a lot. Tesla has some upcoming deadlines to pay back debt.[1] There's a hard deadline in November 2018; Tesla has to pay back Solar City's 5 year convertible notes. Forbes thinks Tesla can get past that one. The $920 million due in March 2019, though, is going to be tough. Tesla needs an extra billion in cash to get past that.
This is why the frantic push to improve cash flow.
> All his other stunts, from the boring company to Thai submarines need to take a hiatus until he gets Tesla out of this trouble
That's making the assumption that Musk's direct involvement in operational affair is a positive contribution to improving matters, which is increasingly becoming less probably given his erratic nature.
He's needed as a mascot for the Believers, but apart from that, he should probably reduce his overnight stays in the factory.
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.
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.
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.
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.
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.
Sure that's all correct and I expect Tesla will have to raise more funds to survive. But from a credit rating standpoint there's a huge difference between "effectively in default" and "practically junk". Many companies issue junk bonds and are able to continue operating.
Tesla is currently in Junk status (that is, below BBB- rating). But within Junk status, there are degrees. Tesla's current rating is Caa1, well below Baa3, according to a rating in March 2018 earlier this year.
FYI: That puts Tesla's bonds as 6-steps BELOW "junk" status. Tesla is well into junk status and is considered a highly speculative bond.
If Tesla's financials continue to degenerate (and remember: this is a company that was losing 300-million per quarter BEFORE the Model3 ramp-up. Who knows how much "the tent" and all of those extra workers cost??), then Moody's will be forced to lower Tesla's bond rating even lower.
"Default Imminent" is a rating of Caa3. Tesla is literally 2-steps away from "Default imminent". Below Caa3 are the ratings of Ca, and C, when the company is finally entering default officially.
-----------
Remember that Tesla has bonds coming due at the end of 2018 and the beginning of 2019. Tesla needs to pay off those bonds somehow, and so far... it seems unlikely that they can pay it off using profits.
Maybe Tesla will reach profitability in the next few months, but their runway is definitely running out.
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.
>> 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.
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.
"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..
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!
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.
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?
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.
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.
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.
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.
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.
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.
I work in automotive. One VP of a fairly large company I was having dinner with remarked “Tesla is about to find out just how difficult it is to build a car”
While I share some of those concerns, in all fairness it should be pointed out that this is literally what cell phone manufacturers said about the iPhone.
Remember that initially Apple sold the iPhone for $600 or something. The big revolution was that the initial buyer wasn't the carrier, but the end user, not only for the iOS ecosystem, but for the phone as well.
iPhone devalued the billions of capital investment that Verizon had made when high-end users ran to Cingular to get the iPhone in the face of a slower, less reliable and less available network, and took the best customers.
Tesla is a very different story. They have to balance the elitist cachet with the fact that relatively consumers actually want an electric car, and that they cannot meet demand of those who do.
Except that CLEARLY wasn't the case. Cell phone mfgs were making garbage, Apple came around and without question revolutionized the industry overnight.
Let's be honest that Tesla hasn't revolutionized the car, they have a clone of existing cars but with an electric powertrain.
Toyota's been developing their own battery management technologies for 21 years. Almost half of their cars & SUVs have a hybrid variant available today, each with 1-3 kWh of NiMH battery capacity and ~200 fl-lbs of additional torque.
There have definitely been news articles and press releases that talk about that. But that type of media is directly related to what someone wanted the stock price to do. Know that when you see it next.
Hard to say how much of that was legit. Maybe Tesla has designs that although Pana makes aren’t available to anyone else. Maybe they’re fairly normal components.
Both Toyota and Honda ventured into hybrids and battery technology long before Tesla was founded. Nearly a decade before, if you trace back to the Prius program initiation.
Tesla was formed to design hybrids to compete against the Prius and Insight and only later pivoted into pure EV. They were actually the market-follower at inception, not the innovator.
I don't see how those Japanese companies can be accused of sitting on technology.
> Both Toyota and Honda ventured into hybrids and battery technology long before Tesla was founded.
Exactly! So how come they are so far behind. If they had been serious about it, they could be far ahead of where Tesla is now, instead, the opposite is true.
> I don't see how those Japanese companies can be accused of sitting on technology
The 'sitting on it' was in reference to the post I was replied to which was talking about a hypothetical situation where these companies had Tesla's technology, and the thing is, they could have had it if they were serious about it.
They're not sitting on it in the nefarious sense, they're just not particularly interested in developing EV compared to the ICE side of their business.
> they're just not particularly interested in developing EV compared to the ICE side of their business.
The ICE business has a lot of cronies that come with it too. I'm sure they're getting kickback for going full-bore with ICE development: you've got the oil dependency, the gas dependency, and the ICE maintenance and component dependency (the more techy and hybrid drivetrains are just a promise for high maintenance costs once things start to break).
Throw in the fact that it's super cheap to develop a more efficient gas engine compared to an electric motor/battery combo; and it's pretty easy to see why none of these companies push for it like an outsider without these vested interests.
In fact, I could see these outside interests being all for an EV with minuscule range (35-50 miles or whatever the big manufacturers tote now) because they know all and well that the majority of US drivers can't hang with that as a daily driver.
Hybrid power trains are available up and down the product line. Both companies have an electric only vehicles that are real cars... not compliance cars.
They move in steps to get the process and supply chain built, and to maximize their capital investments. They also are giving customers what they want — few consumers want electric.
> They also are giving customers what they want — few consumers want electric.
In words often attributed to Henry Ford “If I had asked people what they wanted, they would have said faster horses.”
And your comment proves my point. Existing manufacturers are more interested in their existing ICE business than in fully electric, and will be until it's too late. Yes they 'have' electric vehicles, in the same way the Microsoft had phones and has a search engine, but it's not where they are focusing their business engergies (compared to Tesla).
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.
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."
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...
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...