Tesla shares have fallen following a report that it is seeking refunds from some suppliers. The electric carmaker, which is headed by Elon Musk, told suppliers the refunds were critical to its ability to stay in business, according to the Wall Street Journal.

The refund request applies to money that Tesla has paid to some suppliers since 2016, according to the Journal.

Tesla said the appeal was a standard part of procurement negotiations.

In a statement released Monday, the firm said it had asked fewer than 10 companies to discuss costs related to projects that dated to 2016.

“The remainder of our discussions with suppliers are entirely focused on future parts price and design or process changes that will help us lower fundamental costs,” it said.

Initially, Tesla shares dropped by more than 5% on Monday morning as investors responded to the report, although they recovered some ground later.

Production milestone

Tesla is pushing to improve its financial position after spending heavily to boost production of its latest car, the Model 3.

It has said it is looking to reduce spending on capital projects. The firm also announced it would cut about 9% of its workforce.

Earlier this month, Tesla also said it had finally hit its target of making 5,000 Model 3 cars in a week at the end of June – a milestone that could mean it starts receiving payments to alleviate its cash crunch.

Chief executive Elon Musk has dismissed worries that the firm will run out of cash and need to raise more money.

Instead, he has told investors that he expects the firm to turn a profit in the third quarter of this year.