Tesla Seeks to Speed Up Payments to Suppliers Ahead of Supply Chain Partnerships in 2024

Tesla, Inc. has announced that it plans to further reduce the payment period for its suppliers in 2024, with a new target of around 90 days.

According to Tai Lin, the company's vice president, a significant portion of Tesla's components purchased from Shanghai Super Factory come from domestic suppliers, and the success of the partnership is crucial to Tesla's achievements across China and globally. To achieve a symbiotic relationship with suppliers through innovation, the company believes that improving operational efficiency while minimizing unnecessary expenses will propel businesses forward.

Tai Lin also emphasized in another post on social media that paying suppliers quickly does not necessarily mean increasing product prices. Rather, it's about optimizing costs through enhancing technology, reducing wasteful expenditure (such as lavish amenities for executives, advertising expenses, and losses resulting from incorrect business or technical decisions). By maintaining the well-being of suppliers while continuously investing in R&D and production to offer more affordable products and better services for consumers.

Data from Wind statistics showed that many automotive component executives reported being faced with significant challenges due to delayed payments. Automotive manufacturers' payment turnover periods have deteriorated, according to Wind data. Only among 15 listed passenger car enterprises, Tesla’s figures did stand out as notable, both in its year-end report and Q3 report of payment terms being under 70 days.

A table compiled the payment term period per week among the top 15 passenger car producers, placing the list below those of Tesla (64 days), Guangqi Group (75 days), Geely Volvo (86 days), Jiahuai automobile (90 days), and Chery Automobile and Longkou Automobile also in the 90-day bracket.

Those that ranked low were second-tier companies like Daxiang Automobile Group at 118 days, SAIC Motor at 122 days, BYD at 147 days, Brilliance Blue Pole Automobile at 170 days. The list consisted of third-tier companies with higher wait times such as: Jiange Rongcheng Automobile 194 days, Weichai Wei Tong Automobile 194 days, Yundong Speed Automobile 198 days and Haima Automobile 206 days.