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Moody’s Lowers Tesla’s Credit Rating
Tesla Inc.’s continuing production problems and liquidity concerns caused Moody’s Investors Service to lower its overall rating of the electric car company further into “junk” territory.
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Tesla Inc.’s continuing production problems and liquidity concerns caused Moody’s Investors Service to lower its overall rating of the electric car company further into “junk” territory.
Moody’s dropped its rating from B2 to B3, six levels below investment grade. The service also dropped its rating for the company’s $4.1 billion in senior unsecured notes from B3 to Caa1, seven levels under investment grade. Moody’s adds that its outlook on the company is negative.
The service says Tesla’s poor production record for its new Model 3 electric sedan is a major reason for the downgrade. A successful launch for the new car, Tesla’s first mainstream model, is considered a critical step for the company to move from chronic losses to sustainable profitability.
Bloomberg News estimates that Tesla currently is producing nearly 1,000 Model 3 cars per week. The carmaker has targeted weekly output of 2,500 units by the end of March.
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