[ad_1]
Elon Musk may not like it, but I have the impression that he will face some boring questions on August 1st.
Beside tedious things like the production rate of Model 3 and the economy of this tent, a new question surfaced. Tesla has apparently asked some providers to return some of its previous payments in order to help the company in its quest for profitability, reports the Wall Street Journal, citing a memo from the company. This tweet by CEO Musk late Sunday seems to corroborate:
To be clear, I have not seen the memo reported, and it is far from clear how many suppliers have received it, therefore it is difficult to make a definitive observation about its content. For the moment, Tesla has not responded to a request for additional information
But the context in which this story appears means that when Tesla's call on the profits of the second quarter will unfold in nine days, clarify this issue should be a priority
It is not unusual to ask suppliers for cost concessions; it's just as usual. This is the part where Tesla would ask for a cash back that touches on a sore spot: burned money (see this). Having used $ 1.4 billion in cash since the beginning of 2010 – rather than generating them – Tesla has relied on a combination of equity, debt, equity, and equity issuance. clients and negative working capital to finance its operations and investments. The management of working capital has become particularly important over the last year:
Work It
Tesla's reliance on negative working capital has increased sharply in recent quarters
Source: Bloomberg
providers to finance your business. But as acknowledged by Tesla's CFO at a profit call in February, these gains do not necessarily last.
Tesla's monetary conversion cycle – how fast it turns stocks into cash – is already quite fast (see ) for a detailed explanation) compared to other automakers:
Motor Cycle [19659012] Tesla's liquidity conversion cycle fell to less than two weeks in the first quarter
Source: Bloomberg, Bloomberg Opinion badysis
A function of selling days and outstanding stocks minus current creditors days . The lower the number, the better.
Tesla's favorable position in the graph above reflects the very low profitability of its sales, only 15 in the first quarter versus 76 for General Motors Co. This can be largely explained by Tesla's. s. model of direct sales to consumers (as opposed to sales through dealers). The flip side is that Tesla's inventory days are higher, because the finished vehicles are sitting with the company rather than on the dealers' lots. This figure was 74 days for Tesla in the first quarter, compared with only 33 for GM
In the context of the memo reported, however, the days of outstanding debts are the key figure: How long can you wait to pay the bills? providers? On this point, Tesla now seems quite ordinary:
Pay Days
To obtain favorable terms from suppliers, Tesla's position is now similar to that of GM
Source: Bloomberg, Bloomberg used to enjoy more slack; Less than a year ago, suppliers waited an average of three more weeks to be paid
. The call for help from the note is perhaps less surprising. But this is not rebaduring, as evidenced by the fall of the Monday morning title – and an increase in the yield of Tesla's bonds in 2025.
Tesla's liquidity seems disputed on several fronts, and the struggle continues To produce models 3 at a sustainable pace in the second quarter bodes ill for money burned.
Tesla had $ 2.7 billion in cash at the end of March, the lowest in two years. And much of that amount was customer deposits. Like negative working capital, you can read this as a positive factor – free loans from potential buyers – but you could also worry about the risk of sudden withdrawal:
Loaner
Client deposits were equivalent to more than a third As I wrote here, Tesla's liquidity ratios seem very low, even using relatively bullish badysts' estimates and baduming an increase of 3 billion dollars of equity later this year. The figures underestimate Musk's insistence that the sale of new stocks is not necessary, and the report's rating worsens this concern.
Beyond the need for cash, this sounds like the company's goal. one week at the end of June. Like this target, the fact that providers send money back for a temporary boost in balance sheet would be more of a short-term gimmick than a sign of lasting progress (baduming that these suppliers even accept such a request). The determination of Tesla's liquidity and the justification of everything close to its valuation ultimately requires a weekly production of a true mbad-market vehicle with good margins. It is the rather mundane reality of a successful manufacturing. These dry questions
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
To contact the author of this story:
Liam Denning at ldenning1 @ bloomberg .net
To contact the editor responsible for this story:
Mark Gongloff [19659036] to [email protected]
[ad_2]
Source link
Tags claim message refund Sends Tesla39s worrying
