Tesla supplier sues for alleged $1.8M in unpaid bills

Dive Brief:

French metal alloy supplier Lebronze Alloys is suing Tesla for 1,559,420 Euros ($1,768,460), claiming the automaker failed to pay its bills, Business Insider was first to report.
In the lawsuit, filed with the Northern District of California, Lebronze claims Tesla is in breach of contract with the supplier and engaged in fraud and deceit related to product refusals claiming damaged goods.
Lebronze alleges Tesla violated its original contract when it terminated a deal to buy 250,000 parts from Lebronze. The French supplier outlines in the suit other examples of what it calls "acting in bad faith." The supplier is suing for payment of the $1.77 million along with legal fees and unremunerated damages.

Dive Insight:

The lawsuit, which represents only Lebronze's side of the story, describes repeated communication problems between the supplier and its customer, which in the supplier's eyes amount to intentional bad faith actions.

"At the time it was procuring the amended agreement, Tesla kept secret from [Lebronze] the facts that it intended not to order good faith quantities of the part, that it had already decided to stop purchasing the part from [Lebronze], that it had redesigned the part, and that it intended to prematurely terminate the agreement," the suit reads.

This suit will only add to the suspicion among suppliers that Tesla's cash flow issues will get in the way of their pay. A 2018 survey of Tesla suppliers revealed 18 of 22 suppliers were concerned about repayment.

In October, Fahmi Qadir, a known short-seller with a bet against Tesla, said on Bloomberg TV Friday she suspects Tesla suppliers were not getting paid after "some supplier bankruptcies."

In an email to employees sent earlier this month and obtained by Reuters, Elon Musk said although the company has just received $2.7 billion in additional cash, cost-cutting must still be a priority. That influx of cash from stock offerings and convertible notes will last the company just 10 months, according to Musk.

Tesla did not respond to a request for comment in time for publication.