As Tesla ignites an EV price war, suppliers brace for Musk seeking givebacks

SAN FRANCISCO : Tesla Inc suppliers are bracing for pressure from Chief Executive Elon Musk and his team to cut their prices further after the electric car leader aggressively slashed vehicle prices in a slowing economy, industry officials who work with the automaker and its suppliers said.

"My message is, there's not going to be any room there," added the co-founder of Brooks Wilkins Sharkey & Turco."Many suppliers are financially struggling." While the resulting pressure on suppliers to cut their prices is not new, one executive at a Tesla supplier who asked not to be identified said the EV leader during the COVID-19 pandemic had focused more on delivery over pricing and was willing to even pay more to get parts faster. He worries the comments on last month's earnings conference call signal that may change.

For example, Gissing North America, which had counted Tesla as its biggest customer, filed for bankruptcy last year, partly due to high labor costs and commodity pricing, said Steven Wybo, chief restructuring officer of the Michigan-based maker of acoustic systems and headliners for car ceilings. Musk may seek to reassure suppliers that any potential losses they suffer in lower pricing will be made up in higher volume, industry officials said.NXP Semiconductors said on Tuesday it is increasing the prices it charges customers, citing higher input costs of their own. NXP has not disclosed it is a Tesla supplier, but analysts said a teardown of Tesla vehicles shows that to be the case.

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