Tesla does not pay contractors, two companies have already gone bankrupt

Tesla, despite its status as a leader in the electric car market, has been the subject of a high-profile investigation by CNN. The company is accused of payment delays that have led to the bankruptcy of at least two small businesses in the United States. According to the documents, over the past five years, Tesla has been subject to demands to repay debts of more than $110 million from contractors in Texas. Of this amount, the company has probably not yet paid more than $24 million.

Bankruptcy after a contract with Tesla

In 2022, a small pipe-welding company led by Jennifer Meisner was awarded a large contract to build the Gigafactory Texas in Austin. She engaged the entire team, took out new loans, purchased equipment, and even hired additional employees, hoping that the collaboration with Tesla would be a breakthrough.

But after a few months of work, Tesla stopped paying. Meisner was forced to take out new loans, believing that the money would come. As a result, she was unable to pay salaries, pay contractors, and filed for bankruptcy. Tesla subsequently compensated $650 thousand, but said that Meisner’s company had overstated the bills by».

Another victim of Tesla’s non-payment is Full Circle Technologies. It installed security systems at the same Gigafactory Texas in Austin. After completing the work, the company did not receive $600 thousand, took out short-term loans with high interest rates, but the situation became hopeless. Creditors started blocking accounts and the company declared bankruptcy. Tesla responded by claiming that it was not its fault, but rather that Full Circle itself owed it. Eventually, the parties reached a settlement, but Tesla did not pay a cent.

Sun Coast Resources, which supplied fuel to Tesla’s factory, also reported non-payment of a multimillion-dollar bill. Tesla did not deny that it had received the fuel and did not complain about the quality of services — it only appealed to “procedural issues.” After the publicity, the story ended, but the details of the payment were not disclosed.

Worst of all, many of the affected firms are family-owned businesses. This makes them extremely vulnerable when a customer simply does not pay after the small firm has already invested its limited resources in providing the service.

Elon Musk’s established practice

According to journalists, this situation is typical not only for Tesla but also for other companies Elon Musk. In particular, seven companies declared bankruptcy after Twitter stopped paying after the acquisition. For example, after the purchase, Twitter stopped paying rent for its offices in San Francisco.

Musk has also overseen tough cost-cutting efforts as the unofficial head of the so-called Office of Government Efficiency (DOGE). At the same time, he questioned the work of entire institutions, completely ignoring social norms and the fate of ordinary people.

One of Tesla’s contractors, who wished to remain anonymous, told CNN:

He added that his company had to take out new loans just to wait for payments from Tesla. Despite this, he remains a fan of Musk.

Many of the companies that have filed lawsuits and liens against Musk’s companies have been reluctant to officially disclose their position. They told CNN that they feared retaliation, pointing to Musk’s notorious use of non-disclosure agreements.

Some firms said they still hope to be paid. Others have already written off the losses. Many of them pointed to the numerous ways in which Tesla is trying to avoid having to pay them for services rendered. They also mentioned the confusing wording in the contracts, which often can only be understood by lawyers.

In a commentary, Tesla’s external legal counsel admitted that the company does not care about timely payment of bills:

Musk’s systematic unwillingness to pay the firms on which his empire is built has shocked legal experts. One of them told CNN that he was stunned by how defiant Musk “is in not paying until he is sued”.

Source: electrek, futurism