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Now Even Tesla Wants a Break on Its Rent

By Rich Smith – Apr 14, 2020 at 10:25AM

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Actually, the electric-vehicle manufacturer is demanding it.

American consumers are stressed.

With many folks confined under stay-at-home orders and unable to earn a wage, and others shopping less because of physical-distancing recommendations, retailers are struggling to bring in the cash flow necessary to pay their rent -- much less earn a profit.

Last month, the situation sparked a feud among landlords such as Taubman Centers, which began sending out letters to tenants reminding them of their obligations to pay rent, and tenants ranging from clothier Urban Outfitters to cinema operator AMC, which told their landlords flat-out: Business is lousy, and we won't pay.

To an extent, this isn't surprising. Retail chains and movie theaters go broke all the time for a variety of reasons. But this week we're seeing something entirely different, with one of the hottest stocks on the market -- Tesla (TSLA -1.11%) -- saying that it, too, is going to need a break on its rent.

Tesla Model 3 sedan driving on road with a blurred background

Image source: Tesla.

The Wall Street Journal reported the story last night. In a letter sent to "at least some" of the landlords owning its retail and service center locations, says WSJ, Elon Musk's electric car company advised that "the rapid world pandemic that is now affecting our country has led Tesla to make strategic decisions to ensure the company's long term success and growth. ... As a result of the increasing restrictions on our ability to conduct business, we would like to inform you that we will be reducing our monthly rent obligations effective immediately."

No imploring leniency. No request for negotiations. Tesla just simply said: We're paying you less; deal with it.

In the face of the global recession wrecking the retail industry, landlords may have no other choice but to do just that.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

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