Tesla’s request to suppliers for assistance and associated impact

An article in the Wall Street Journal (Tuesday, August 21, 2018) titled “Some Suppliers Worry About Tesla” quotes suppliers claiming that Tesla is delaying payments and demanding cash back. They cite that Tesla is now paying production related suppliers 95% on-time, and paying nonproduction suppliers 80% ontime. But Tesla claims that payments delays reflect discussions about the parts delivered. The article claims that Tesla demanded cash back of the order of 9 to 20% from capital equipment suppliers for equipment delivered back in 2016. Do Tesla’s actions reflect normal procurement negotiations between two members of a supply chain or something more serious ? Given that Tesla is expanding the electric vehicle market with novel designs, should this be considered normal ramp-up issues for new products ? At what point should we treat these actions as indicating financial distress at Tesla ?

About aviyer2010

This entry was posted in Capacity, cash, Collaboration, delivery, Operations Management, product, technology, Tesla and tagged , , , . Bookmark the permalink.

1 Response to Tesla’s request to suppliers for assistance and associated impact

  1. Kyle Harshbarger says:

    At this point in their product maturity, discussions about parts delivered should not account for 5-20% of late payments. The purpose of this delay would be quality issues. Does this mean Tesla has a quality concern on 5% of the car? I find this hard to believe. It could be that suppliers are just using the press to get paid, but I’m not sure that is a good long-term strategy.

    There seems to be too much smoke around Musk at this point that there are fires going on at Tesla.

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