Wrong signal

23 July 2018 By Antony Currie Follow @AntonyMCurrie

Elon Musk asked some suppliers to cut prices. He’d be nuts not to. It’s a way for the $53 bln electric-car maker to control costs while dangling the prospect of more business for parts makers if Tesla succeeds. But pitching it as a do-or-die moment undermines Musk’s credibility.

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Tesla has asked some of its parts suppliers to refund some of the payments they have received from the electric-car maker, the Wall Street Journal reported on July 22. The newspaper cited a memo sent to a supplier the previous week. The WSJ also spoke to a number of suppliers which had not been contacted about such rebates.

Elon Musk, Tesla’s chief executive, wrote on Twitter on July 23: “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 said in a statement it had asked fewer than 10 suppliers to reduce the total cost of long-term projects that started in 2016 and that all other discussions with suppliers dealt with prices in the future.

Tesla is due to report second-quarter earnings after the stock market closes on Aug. 1.

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