Tesla's debt looms and company continues to face 'challenges,' Moody's says

Changes mandated by U.S. securities regulators for Tesla Inc. will reduce corporate-governance risk at the Silicon Valley car maker, but the company "continues to face important governance, financial and operational challenges," analyst Bruce Clark of Moody's Investors Service said in a comment earlier this week. About $1.15 billion in debt matures between November and March, and the company's cash stands around $2.2 billion as of June, Clark said. Tesla's current cash position and its Model 3 production and sales ramp increase the likelihood that the company will be able to repay the debt, but trade tensions with China could dampen Tesla's ability to generate cash, Clark said. "China is an important long-term market for Tesla and exports to the country represented approximately 20% of automotive revenues during 2017," he said. Departures of senior executives is another sore point, as they have been disruptive to the company at a critical time, he said. Moreover, Tesla's competitive advantage has lost some of its luster, he said. With delivery delays and initially low rate production for the Model 3, "as well as a delivered cost to the consumer that is well above the initial expected price of about $35,000, Tesla's advantage of being first to market with a unique product is less formidable than it had been," Clark said. Tesla shares fell 2.4% on Wednesday, bringing weekly gains to 11% so far. The stock is down 6% in the year, versus advances of 10% and 9% for the S&P 500 index and the Dow Jones Industrial Average. .

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