Tesla reportedly asks for money back on payments to suppliers

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Tesla has reportedly asked suppliers to return some of the payments they have received for previous work, according to The Wall Street Journal. Analysts say Tesla needs to sell a lot more cars.

According to the Journal, Tesla is facing payments on $230 million in debt in November if its stock price doesn't reach a conversion price of $560.6 per share.

The memo, from a global supply manager, said the cash back was "essential to Tesla's continued operation", the WSJ said, telling the supplier to consider the refund an investment in the company's long-term health.

If sustained, that production rate could lead to a healthy earnings report when Tesla releases its second-quarter results on August 1.

Not too long ago, Tesla CEO Elon Musk, who has a penchant for making bold promises, claimed that Tesla would be able to turn a profit sometime before 2019.

This strategy is part of a plan announced a year ago where Tesla was able to negotiate longer payment terms to about 60 days for Model 3 parts, which would allow the auto maker to make the vehicle and get paid for it before the bill is due to suppliers.

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In the memo to suppliers last week, Tesla asked for a meaningful amount of money to help it become profitable.

"This is troubling for us to hear", said Morningstar analyst David Whiston in a note to clients.

Tesla did not respond to a series of emails and phone calls seeking comment.

"Now that we're in a stronger position with Model 3 production ramping [up], it is a good time to improve our competitive advantage in this area", a company spokesman said. "It would not be correct to apply historical cost savings to current quarter", tweeted Musk. Mr Musk has said the company does not need to raise cash this year, but several analysts have predicted that the electric auto maker would need to raise capital soon.

All of that has to happen while Tesla carries $10.5 billion in debt.

After the statement, Tesla shares bounced back, but were still down 2.7 percent.