Tesla is crown jewel of Elon Musk's multi-tentacle business empire. It's also one of the most indebted of the bunch, with more liens and lawsuits piling up than one might expect. In fact, a recent report from CNN outlines that Tesla owes more than $24 million in liens to the very contractors that helped build the automaker into the giant that it is today.
The CNN investigation found that dozens of contractors that have performed work for Tesla over the years—many of them just small mom and pop outfits—claim to have been stiffed out of payments by Musk's company.
Despite repeated attempts to collect funds owed, many of these contractors say that Tesla's procedural hell has made collecting what they're owed next to impossible.
Many of these businesses claim that sending an invoice to Tesla is like tossing it into a black hole. Eventually, many of these contractors have to go the legal route and file liens and lawsuits against Tesla, so as long as they can stave off insolvency until they are paid.
One of these businesses was Professional Process Piping. By the time the company filed for bankruptcy, Tesla had racked up an impressive half-million dollars in unpaid invoices. In fact, $380,000 worth of those invoices were more than 90 days past due, according to CNN's investigation into court records on the matter. And at one point, the automaker had amassed $1 million in unpaid work—enough for the owner to begin paying for equipment out of her own pocket.
Now, unpaid invoices aren't a uniquely Tesla thing. However, Tesla is a pretty big offender when it comes to large corporations. Let's compare that to Apple, for example. In the same counties where Tesla owes $24 million in liens, Apple owes roughly $1.2 million.
Let's be clear that liens don't necessarily mean that a business has done something wrong, just that another party claims that they are owed money by the business. In Professional Process Piping's case, an attorney argued that the company "overbilled" the project and "provided substandard labor and services."
And in the same breath, the attorneys also acknowledge that Tesla can take a long time to settle its invoices.
“I don’t disagree that it does take Tesla some time to pay,” said an attorney representing Tesla in the bankruptcy cases for Professional Process Piping. The attorney added: “That goes for legal bills, too [...] I know it full well.”
Full Circle Technologies, a small Austin-based security integrator that handles access control devices and video surveillance, was also forced to file for bankruptcy after Tesla reportedly racked up almost $600,000 in unpaid bills. In its bankruptcy filing, the company said that it was "forced to take on short-term, high-interest loans to bridge the gap between performing the work for Tesla and the payment for its services."
Tesla rebutted by claiming that Full Circle actually owed Tesla money for allegedly breaching the contract it held with Tesla. But another Texas company, Sun Coast Resources out of Houston, sued Tesla for more than $2.6 million after the automaker allegedly failed to pay for fuel used for construction machinery at the company's Gigafactory in Austin.
Musk-owned companies currently have outstanding liens claimed by more than 100 companies. This might be an indication that Tesla is simply bad at paying its contractors on time, or, as some contractors speculate, it could be a strategic way for Tesla to penny-pinch and negotiate down large invoices through non-payment and legal mediation.
In the case of Full Circle, the owner told CNN that Tesla was "released from its obligation without paying a cent," so maybe that speculation of penny pinching has some merit—or maybe Tesla just really isn't great with paying its bills. Either way, that has earned Tesla a reputation with Austin-based companies.
"[Elon Musk's] goal is to run through everything now—he doesn’t care what or who that impacts—to save the future of the world,” one entrepreneur anonymously told CNN. "Tesla was probably one of the only companies we did business with where it just felt like they absolutely did not care about putting a company out of business."
