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Tesla (TSLA) bonds upgraded to investment grade by Moody's ratings agency

The investors service has assigned Tesla a Baa3 rating, noting a stable outlook based on many factors.

Sam Chandler

March 20, 2023 5:00 PM

Tesla

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The continued success of Tesla (TSLA) has seen Moody’s Investors Service upgrade the electric vehicle company’s rating from Ba1 to Baa3. The service has also withdrawn the Ba1-PD probability of default rating and the SGL-1 speculative grade liquidity rating.

In a statement by Moody’s Investors Service on March 20, 2023, the company has upgraded Tesla (TSLA) to a Baa3 rating, noting the company’s outlook is stable. The statement, reported on by Sawyer Merritt on Twitter, highlights the reasoning behind this shift, noting that Moody expects Tesla to remain “one of the foremost manufacturers of battery electric vehicles”.

The Baa3 long-term issuer rating reflects Moody's view that Tesla will maintain its position as one of the leading manufacturers of battery electric vehicles, as the company further solidifies its global footprint. Moody's anticipates that Tesla will deliver nearly 1.8 million vehicles in 2023, a 34% increase compared to the 1.3 million vehicles that it delivered in 2022, and nearly double the deliveries in 2021. Considerable investments in new vehicle and battery cell production facilities enable a steep increase in vehicle deliveries.

Moody’s statement indicates a belief that Tesla is in a strong position. The statement goes on to note the products on offer are expanding with Cybertruck still set to release this year and the goal to create a “next generation vehicle” with a targeted 50 percent reduction in cost. Furthermore, Tesla has already cut the prices of the Model S and X after reducing the price of its Model 3 and Model Y.

Additionally, Moody expects Tesla’s financial policy to remain prudent, that the liquidity will remain good, and notes the company has limited debt maturities in the next two years.

However, the analysis does include reasons why the rating could be downgraded. Part of this risk includes competition with other automobile manufacturers. The likes of Rivian and Ford are already making waves in the electric vehicle space with Sony Honda joining the competition with its plans to release an EV in 2026.

Tesla (TSLA) had its Q4 2022 earnings call back in January, with its Q1 2023 call potentially occurring sometime in April. Stay tuned to Shacknews as we bring you the latest on Tesla including its performance and competitors.

Sam Chandler

Guides Editor

Hailing from the land down under, Sam Chandler brings a bit of the southern hemisphere flair to his work. After bouncing round a few universities, securing a bachelor degree, and entering the video game industry, he's found his new family here at Shacknews as a Guides Editor. There's nothing he loves more than crafting a guide that will help someone. If you need help with a guide, or notice something not quite right, you can message him on X: @SamuelChandler