After year full of regulatory fights, several executive departures and a volatile share price, suppliers are increasingly asking for letters of credit (L/Cs) if carmaker Tesla is the buyer.

Financial strain has been evident at Tesla for a while, despite the firm's ambitious plans trumpeted by founder Elon Musk to build a US$500 million factory in China.

L/Cs soaring

The value of Tesla's L/Cs soared by 53 per cent in the second half of last year according to its accounts.

Analysts say vendors who are increasingly unsure whether the carmaker will be able to pay its bills in full or on time are taking out the L/Cs to guarantee payment.

Capex plummeting

The company decreased capital expenditures throughout 2018 and plans for only a modest increase this year.

Capital expenditures declined 43 per cent last year to US$2.32 billion, and the company is targeting $2.5 billion in 2019, well below the US$4.08 billion it invested in assets in 2017.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.