Tesla shares hit by report it is seeking refunds

Tesla shares have fallen by more than 5% following a report that it is seeking refunds from suppliers.

The electric carmaker, which is headed by Elon Musk, told suppliers the refunds were critical to its ability to stay in business, according to the Wall Street Journal.

Tesla did not respond to a BBC request for comment.

The company told the Journal that the appeal was a standard part of procurement negotiations.

The refund request applies to money that Tesla has paid to some suppliers since 2016, according to the Journal. The newspaper said it was unclear how many companies had received the request.

Initially, Tesla shares dropped by more than 5% on Monday morning as investors responded to the report, although they recovered some ground later.

Production milestone

Tesla is pushing to improve its financial position as it spends heavily to boost production of its latest car, the Model 3.

Last month, the firm said it would lay off about 9% of its workforce.

It also said it had finally hit its target of making 5,000 Model 3 cars in a week at the end of June – a milestone that could mean it starts receiving payments to alleviate its cash crunch.

• Is Tesla heading for trouble?

Chief executive Elon Musk has dismissed worries that the firm will run out of cash and needs to raise more money.

Instead, he has told investors that he expects the firm to turn a profit in the third quarter of this year.