Moody's Raises Tesla Credit Rating by Two Notches

(Photo by Reuters)

[Asia Economy Reporter Yujin Cho] The global credit rating agency Moody's has upgraded the credit rating of the U.S. electric vehicle company Tesla by two notches to 'Ba1'.

According to major foreign media on the 25th (local time), Moody's raised Tesla's credit rating from the previous 'Ba3' to 'Ba1' by two levels the day before and hinted at the possibility of further upgrades. 'Ba1' is just below the investment-grade level.

Moody's stated, "Tesla's financial policy appears to be prudent, and liquidity is expected to remain at a very healthy level," adding, "The more competitive supply of battery electric vehicles from other automakers in 2023 will positively impact the company's margins."

It further noted that if Tesla successfully expands its business globally and maintains strong competitiveness in the electric vehicle market, the rating could be upgraded further.

Despite the semiconductor supply shortage last year, Tesla delivered approximately 936,172 vehicles to customers worldwide, nearly reaching 1 million units, marking an 87% increase in deliveries compared to the previous year.

Deliveries in the fourth quarter of last year reached a record high of 308,600 units, breaking the quarterly delivery record for six consecutive quarters.

In this regard, Moody's forecasted that deliveries this year will exceed 1.4 million units, significantly surpassing 1 million.

Joel Levington, a Bloomberg Intelligence analyst, said that Tesla can expect further rating upgrades if it maintains its current status and predicted that it will reach investment-grade status within the next 12 to 18 months.

He stated that Tesla's profits have increased significantly and that it has repaid $5 billion (approximately 6 trillion KRW) in debt over the past two years. As a result, the debt ratio fell below 1 at the end of last year and is expected to remain at this level this year as well.