Tesla Accused of Owing Debts Leading to Company Bankruptcy: Not "Dignified" Anymore?

Tesla has long delayed payments?

Is it due to strict supply chain cost management? Or is this global electric vehicle giant deeply entangled in a financial fog?

Tesla, as a leading company in the global electric vehicle industry, has long maintained its position at the forefront of the industry through innovative technology and aggressive market strategies. However, recently, this tech giant is facing an escalating supply chain trust crisis—several small American suppliers have publicly accused Tesla of long-term overdue payments, which have led to their financial chain breaking, and some companies have even gone bankrupt.

From "shortening the supplier payment cycle to 90 days" to owing payments to dozens of suppliers.

Recently, Gasgoo Auto noticed that CNN reported that over the past five years, contractors in Texas have filed lien claims against Tesla totaling more than $110 million. Among them, over $24 million is reportedly still unpaid, involving dozens of companies.

In two cases, contractors (most of whom are small American businesses) had to file for bankruptcy due to overdue payments.

One of the companies is a small pipe welding enterprise. In 2022, the company signed a multi-million-dollar contract with Tesla to provide services for the Austin Gigafactory. The owner of the company stated: "At that time, there was more than 1 million US dollars (approximately 7.203 million RMB at the current exchange rate) in project payments unpaid, while Tesla subsequently paid its subcontractors 650,000 US dollars (approximately 4.682 million RMB at the current exchange rate) and claimed that the charges were 'too high'."

Another local small business, Full Circle, has also found itself in a similar predicament due to Tesla's overdue payments. In its bankruptcy filings, the company stated that Tesla owed it nearly $600,000 (approximately 4.322 million RMB at the current exchange rate), and that it was "forced to take out short-term, high-interest loans to cover the gap between providing services to Tesla and receiving payment." When creditors began to seize the company's bank accounts, Full Circle said it had no choice but to file for bankruptcy.

Tesla then filed a countersuit at the bankruptcy hearing, claiming that Full Circle had breached the contract and actually owed them money. The two companies eventually reached a settlement, but Full Circle CEO Abheeshek Sharma told CNN that Tesla cleared the debt without paying a single penny.

In addition, Sun Coast Resources, which supplies fuel to Tesla's factory, claimed that Tesla owed millions of dollars in unpaid bills. Tesla has never denied receiving the fuel or any issues with the quality of service but has delayed payment by citing various procedural reasons. Fortunately, the case was resolved earlier this year after being exposed.

According to CNN, those who claim they are owed money, many of whom run family businesses, say that Musk's company often delays payment for months or even fails to pay at all. This could trigger a devastating chain reaction, as a disruption in cash flow would make it difficult for suppliers to maintain operations.

It is noteworthy that Tesla was reported to be in arrears with its suppliers, which is somewhat surprising. One reason is that at the end of 2024, Tesla's Vice President Tao Lin once stated in a post that "Tesla has once again shortened the payment cycle for suppliers."

Tao Lin said: "This year (2024), Tesla has once again shortened the payment cycle for supply chain partners, currently requiring only about 90 days. Meanwhile, over 95% of the components for the Shanghai Gigafactory are sourced from local suppliers. The achievements Tesla has made in China and globally are closely linked to these partners."

Spend where necessary, save where possible. Fast payments to suppliers do not mean we need to raise product prices. Cost control equals improving efficiency through technological innovation plus eliminating all unnecessary expenses (such as lavish reception centers, advertising costs, executive offices... especially losses caused by wrong business or technical decisions). While ensuring the interests of our suppliers, we continue to invest in R&D and production, striving to provide consumers with better prices and products.

In addition, data from Bloomberg at that time also showed that Tesla's Shanghai Gigafactory would shorten its payment cycle to 101 days in 2023, compared to a payment cycle of 112 days in 2022 and 113 days in 2021.

In less than a year, Tesla has been rumored to owe payments to suppliers. Where exactly does the problem lie?

"Tesla, the 'Cost-Cutting Demon,' Extends Its 'Cost-Cutting Claws' to Small Suppliers?"

This turmoil not only exposed Tesla's shortcomings in supply chain management but also reflected the power imbalance between tech giants and small suppliers, as well as the increasingly serious "big corporation disease" in the global manufacturing ecosystem.

Some industry analysts stated: "(Tesla) this is not merely a financial delay, but a disguised form of cost shifting." "Tesla is using its market dominance to transfer financial pressure to suppliers, especially small businesses lacking bargaining power."

This statement may not be untrue.

Image source: Tesla Weibo

It should be noted that Tesla's cost control capabilities are highly remarkable within the global automotive industry. Previously, Tesla had long been committed to reducing costs through technology, and there have been few reports of "delayed payments to suppliers."

It is worth noting, however, that Tesla is no longer what it used to be.

In recent years, Tesla's sales have faced increasingly stringent challenges in the global automobile market, resulting in its financial performance falling short of expectations.

On July 23, Tesla announced its financial results for the second quarter of 2025. According to the Generally Accepted Accounting Principles (GAAP) of the United States, its net profit attributable to common stockholders decreased by 16% year-on-year to $1.172 billion, primarily due to continued sluggish sales and increased promotions of electric vehicles to clear inventory. Total revenue fell by 12% year-on-year to $22.496 billion, with automotive sales revenue down 15% year-on-year to $15.787 billion, and revenue from sales of automotive carbon credits halved year-on-year to $439 million. Operating profit plummeted by 42% year-on-year to $923 million, and the operating margin dropped from 6.3% in the same period last year to 4.1%.

During the earnings call, Musk pointed out that as the U.S. electric vehicle tax credit policy is set to expire on September 30, coupled with Tesla’s continued weak sales and the fact that revenue generation from the emerging robotaxi business will still take some time, the company may face difficult quarters ahead. At the same time, Tesla is facing increasingly fierce competition in its key markets, including the United States, Europe, and China.

Musk said, "We are in an awkward transition period—the U.S. will cancel a large number of incentive policies, while the autonomous driving business is still in a relatively early stage. The coming quarters could be challenging for us, not necessarily, but there is such a possibility."

According to official industry data, Tesla’s registration numbers in several European countries saw a sharp decline in July: in Sweden, registrations dropped to 163 vehicles, down 86% year-on-year; in Denmark, registrations fell to 336 vehicles, down 52%; in France, registrations dropped to 1,307 vehicles, down 27%; and in the Netherlands, registrations decreased to 443 vehicles, down 62%. This marks the seventh consecutive month of declining sales for Tesla in all of these countries.

According to data released by the China Passenger Car Association on August 4, the delivery volume of Tesla's China-made Model 3 and Model Y vehicles (including those exported to Europe and other markets) was 67,886 units in July, a month-on-month decrease of 5.2% compared to June. Meanwhile, the overall sales of electric and hybrid vehicles in the Chinese market increased by 25%, reaching 1.18 million units, breaking the usual sales lull in July.

The controversy over Tesla's overdue payments reflects the deep-seated contradictions in the global electric vehicle industry during its transition period.

When sales growth stalls and market competition intensifies, even industry giants have to face the dual challenge of "revenue enhancement" and "cost reduction." However, shifting financial pressure onto the most vulnerable parts of the supply chain is a short-sighted approach that not only harms the industry ecosystem but may also undermine the company's own foundation for innovation.

Tesla needs to understand that true cost control should not be achieved at the expense of its partners’ survival. Only a healthy business ecosystem can foster lasting competitiveness. As the global automotive industry accelerates its shift toward electrification, how to balance short-term performance with long-term development has become a challenge that all car manufacturers must face.