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The Morning Risk Report: Some Tesla Suppliers Fret About Getting Paid |
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A Tesla Inc. vehicle with a "Model 3" license plate seen in the showroom located in New York. PHOTO: NANCY KASZERMAN/ZUMA PRESS
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Good morning. Some of Tesla Inc.’s suppliers are concerned about the automaker’s financial strength after production of one of its vehicles drained some of its cash, The Wall Street Journal’s Tim Higgins, Marc Vartabedian and Christina Rogers report.
Survey says: A recent survey sent by the Original Equipment Suppliers Association to top executives found that 18 of 22 respondents believe Tesla is now a financial risk to their companies, according to the document reviewed by the Journal. Separately, several suppliers told the Journal that Tesla has tried to stretch out payments or asked for significant cash back. In some cases, according to public records, small suppliers to Tesla said they failed to get paid for services rendered.
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“We’re not behind because we can’t pay them,” Tesla Chief Executive Elon Musk said in an interview on Friday. “It is just because we’re arguing whether the parts are right.”
Supplier anxiety: The suppliers in the report represent a sliver of the hundreds of vendors that provide Tesla with components, tooling of manufacturing parts and services such as building construction. But taken together, the survey, interviews and documents show some suppliers are anxious about Tesla’s ability to pay them back.
Cash is key: In the interview, Mr. Musk and financial chief Deepak Ahuja said Tesla’s financial strength is improving and the company remains on track to be cash-flow positive and profitable in the current quarter. They said relations with its suppliers are good.
Mr. Ahuja said it is normal for automakers to ask for better terms as business improves.
“If there was any doubt in our suppliers in the first place that should definitely be strongly extinguished, with our commentary and our results and the ramp-up of our production,” Mr. Ahuja said.
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16 |
Number of companies that have filed mechanic's liens against Tesla since October, according to public records.
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Liens pile up: Public records show that 16 companies since October have taken the unusual step of filing mechanic’s liens—or legal claims seeking unpaid compensation—against Tesla, claiming bills haven’t been paid for supplies and services. Some of the suppliers have since been paid, and the total outsanding dollar amount is small, according to documents.
Broader trend: Financial chiefs at the largest U.S. companies have been holding back payments to suppliers for longer than at any point in the past decade, the Journal reported in June. The 1,000 largest companies increased delays to 56.7 days in 2017, the Journal reported at the time, up about 3.4 days from 2016.
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“We are definitely not going bankrupt.”
| — Tesla CEO Elon Musk |
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A container delivery truck passes containers stacked at the Port of Long Beach in Long Beach, California including one from COSCO, the Chinese state-owned shipping and logistics company, in a file photo taken July 6. PHOTO: FREDERIC J. BROWN/AFP/GETTY IMAGES
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The Trump administration is moving closer this week to levying tariffs on nearly half of Chinese imports despite broad opposition from U.S. business and the start of a fresh round of talks between the U.S. and China to settle the trade dispute. Auto makers exported a record $7.4 billion worth of vehicles to China last month, as European and Japanese companies took advantage of a tariff cut that excludes their U.S. counterparts.
The Trump administration is emphasizing a less-punitive approach to combat white-collar crime and civil violations across the federal government, NBC News found in an analysis of federal agencies, expanding its efforts to reward companies that come forward to report violations and take steps to fix them.
ConocoPhillips will halt further legal actions against the troubled state-run energy giant Petroleós de Venezuela SA over an unpaid $2 billion arbitration award after both sides agreed on a payment plan.
Andrew Wheeler, President Trump’s acting administrator of the Environmental Protection Agency, on Monday signed the proposal to scrap environmental restrictions on power plants, and leave much of the regulation of the industry to states. Environmental groups are already plotting a challenge to the long-telegraphed action.
Merrill Lynch will pay $8.9 million to settle charges it failed to disclose a conflict of interest, the Securities and Exchange Commission said Monday. The SEC said that Merrill, the brokerage arm of Bank of America Corp., mishandled 1,500 investor accounts through its relationship with a third-party product provider. The Korea Exchange said it was monitoring Merrill’s Seoul operations, Reuters reports, amid reported concerns about its high-speed
trading operations.
A unit of Interactive Brokers Group Inc., one of the largest U.S. retail brokerages, was fined $5.5 million over allegations that it broke federal rules on the “naked” short selling of stocks thousands of times over a three-year period.
Nearly two dozen state attorneys general, along with the District of Columbia, asked a U.S. appeals court to reinstate net neutrality rules put in place by the Obama administration, Reuters reports.
Several cryptocurrency exchanges signed on to what appears to be the industry’s first self-regulatory organization, a step toward transparency in the notoriously opaque and volatile market.
Total SA is having difficulty unloading its stake in a $5 billion natural-gas project in Iran to a Chinese partner, after stopping work on the project earlier this year due to U.S. sanctions.
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Some large American insurance companies are seeking clarity from regulators on a vaguely worded tax provision that threatens to pinch their bottom line.
Shares of Tesla dropped 4% after a $113 cut in JP Morgan Chase Inc.’s price target punched new holes in the company chief’s plan to take the automaker private, Reuters reports.
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Fiat Chrysler Automobiles NV’s new Chief Executive Mike Manley faces some unfinished business in Europe. Mr. Manley will have to address multiple challenges, including plant overcapacity and a bloated workforce in Europe, which accounts for 36% of FCA’s employees but one-tenth of its profits.
In her five years in office, Russia’s central-bank chief, Elvira Nabiullina, has closed hundreds of weak banks, stymied the exodus of Russian wealth abroad and transformed monetary policy to bring inflation to record lows. That has earned her an unusual amount of freedom to make tough decisions, even if that means treading on powerful interests.
Who’s the boss? Many workers say they have more than one, and that’s causing frustration and confusion in the office.
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Microsoft Corp. last week took down six internet domains registered by a Russian hacking group that sought to mimic legitimate websites. The latest targets are conservative groups that broke with President Trump, The New York Times reports. The AP notes that the tactics are similar to the ones allegedly used by Russian hackers in the 2016 presidential election. Moscow has regularly dismissed allegations of hacking and meddling in the U.S. election process.
Alphabet Inc.’s Google was accused in a lawsuit of illegally tracking the movements of millions of iPhone and Android phone users even when they use a privacy setting to prevent it, Reuters reports.
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Car-rental giant Hertz Global Holdings Inc. named Jamere Jackson, the former finance chief of Nielsen Holdings PLC, to lead its finance team.
Toy train maker Hornby PLC announced a new chairman who took over “with immediate effect,” FT reports.
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