Investor's Corner
Moody’s upgrades Tesla (TSLA) to ‘Stable’ over Model 3 efficiencies, adequate liquidity
Tesla (NASDAQ:TSLA) recently received a positive report and upgrade from Moody’s Investors Service, which changed its outlook towards the electric car maker from “Negative” to “Stable.” In its report, Moody’s affirmed Tesla’s ratings, including the company’s B3 Corporate Family Rating (CFR) and Caa1 senior unsecured ratings. Tesla’s speculative grade liquidity was also changed from SGL-4 (Weak) to SGL-3 (Adequate).
According to the financial firm, Tesla’s B3 CFR reflects the company’s achievements in the production ramp of the Model 3, whose output is “now in line with Moody’s earlier expectations.” This, according to the firm’s report, should allow Tesla to “achieve production efficiencies, lower costs, and strengthen automotive gross margins.” These improvements are also key to offset the losses generated by the company’s automotive service operations, which could then push Tesla towards profitability. Moody’s added that the sale of regulatory credits is expected to give a boost to Tesla’s finances as well.
“An important contributor to achieving net profit will be the sale of regulatory credits, which represent no incremental cost to the company and fall directly to earnings. We expect these sales, which accounted for over $400 million in revenues/earnings during 2018, will continue to grow as emission regulations become more restrictive in all major markets,” Moody’s wrote.
Moody’s stated that it still expects Tesla to generate modestly negative free cash flow of around $500 million over the next 12 months, though the firm expects the electric car maker’s capital expenditures to decrease over this time, thanks to the company’s growing experience in its automotive production business. “Tesla’s increased experience with its production processes have significantly reduced the level of capital expenditures needed to support its growth plans, with annual CapEx falling from approximately $4 billion in 2017 to a current run rate of $1.5 to $2 billion, thus providing a significant boost to expected cash flow,” the firm noted.
Impressively, Moody’s noted that Tesla’s liquidity position is now “Adequate.” The company’s $5 billion in cash, for one, is expected to give the electric car maker a generous cushion to address maturing debt obligations through 2021, as well as address potential operational challenges that it could face in the coming year. Moody’s explains its positive outlook on Tesla’s liquidity as follows.
“Tesla has an adequate liquidity profile supported primarily by its $5 billion cash position. After giving consideration for approximately $1 billion in cash needed to fund normal ongoing operations, and $566 million to cover a November 2019 convertible note maturity, Tesla has incremental liquidity of approximately $3.4 billion. This affords the company an important cushion to contend with potential stress arising from softness in US demand, operational challenges accompanying its European and Chinese expansion plans, and the time that will be necessary to implement additional efficiency-enhancing initiatives,” the firm noted.
Nevertheless, Moody’s argued that Tesla still has notable areas of improvement, particularly in terms of its corporate governance. The firm cites the significant turnover of the company’s senior management ranks including JB Straubel’s recent decision to step aside from his CFO post; the actions of Elon Musk which have resulted in conflicts against the Securities and Exchange Commission; and a board of directors that has “not demonstrated meaningful oversight over the CEO’s activities” as areas of improvement for the electric car maker. While Tesla has been making efforts to improve this, such as the appointment of two new members of its board, Moody’s argues that “Tesla retains a very weak corporate governance structure” nonetheless.
Tesla’s updated rating with Moody’s could be upgraded or downgraded in the future, depending on the company’s performance. The firm noted that it could upgrade Tesla further if the company could demonstrate “sustained profitability and positive free cash flow in the face of rapid expansion plans in Europe and China,” as well as a capability to maintain an adequate liquidity profile. On the other hand, Tesla’s rating could be lowered if demand for its vehicles begins to soften in the United States, or if the company makes missteps in its China and Europe ramp. A downgrade could also happen if Tesla is unable to remain on a clear path towards strengthening margins in its automotive business, while narrowing losses in its other endeavors.
Moody’s full report on Tesla’s recent upgrade could be accessed here.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Investor's Corner
New drone video shows Tesla’s Optimus Factory reaching a turning point
New drone footage shows Tesla’s dedicated Optimus factory steel frame nearing completion at Giga Texas.
Tesla’s dedicated Optimus factory at Gigafactory Texas is closing in on a finished steel frame, according to drone footage posted Thursday afternoon by longtime site observer Joe Tegtmeyer. In the video, Tegtmeyer said structural steel assembly is now about five column grids away from reaching the building’s north perimeter beam, putting the primary skeleton in its final stretch roughly six months after Tesla broke ground on the North Campus site in late March.
The Giga Texas Optimus Factory latest update … construction keeps moving fast!
Steel assembly is now only about 5 column grids from the north perimeter beam. Concrete is going in on the three upper floors, rebar is still being laid for more pours, and footing / grade-beam work… pic.twitter.com/qvFPvwnYzW
— Joe Tegtmeyer 🚀 🤠🛸😎 (@JoeTegtmeyer) September 17, 2026
Tegtmeyer’s footage shows concrete already going in on three upper floors while crews continue laying rebar and pouring grade beam footings at ground level. That kind of parallel work, steel rising at one end of the site while concrete sets at the other, is a scheduling approach Tesla used at the original Giga Texas building and appears to be repeating here to save time before the plant’s targeted 2027 production start.
Teslarati has tracked the building’s progress since Tesla confirmed construction was officially underway in May, when the first steel structure went up on what was then bare, reclaimed land. The facility is part of a more than 5.2 million square foot expansion of Giga Texas’s North Campus that Tesla has said will eventually run nearly the length of the existing vehicle factory, over 4,000 feet, while sitting somewhat narrower. Musk has pegged the long term output target at 10 million Optimus units a year once the line is running at full capacity, a volume that would dwarf the one million unit pilot line Tesla is standing up separately at its Fremont, California factory.
Tesla Giga Texas to feature massive Optimus V4 production line
The Texas facility sits alongside another major buildout on the same campus. Terafab, the joint Tesla and SpaceX chip fabrication plant that will eventually supply the silicon running Optimus units in the field. Housing robot assembly and chip production on the same grounds is a deliberate supply chain decision, cutting down on the shipping and lead time that would otherwise sit between the two.
Tesla has not given an updated timeline beyond its previously stated goal of bringing high volume Optimus production online at the site in the summer of 2027. Fremont’s smaller pilot line began mass producing the current Gen 3 robot in January, with that plant expected to build tens of thousands of units this year primarily to generate the real world data Tesla needs to refine the robot’s software before Giga Texas ramps up. Six months of visible construction progress, tracked almost entirely through Tegtmeyer’s recurring drone flights, gives the clearest outside look yet at how seriously Tesla is treating that 2027 deadline.
Investor's Corner
Tesla and SpaceX take “Terafab” Trademark fight to Federal Court
Tesla and SpaceX sue a small Illinois firm after cease and desist letters over Terafab.
Tesla and SpaceX are asking a federal judge to rule that their planned Terafab chip factory does not infringe a small Illinois company’s trademark, a request that arrives only after months of quiet negotiation broke down this summer.
The dispute traces to May 18, when Tesla filed three U.S. trademark applications for “Terafab” and “Tesla Terafab,” covering semiconductor chips and related chip making services. TERA-print LLC, a nanotechnology company that has held a federal trademark for “Tera-Fab” since 2021, responded five days later with a cease and desist letter. According to the lawsuit, first reported by Reuters, TERA-print argued that Tesla and SpaceX’s use of “Terafab” would confuse consumers familiar with its own trademark, which covers a desktop photolithography printer sold to researchers for sensor and bioengineering work.
What stands out in the filing is the timing of TERA-print’s own paperwork. One day before sending that cease and desist letter, on May 22, TERA-print applied to expand its existing registration to cover semiconductor materials, silicon chips, nanoelectronic devices and AI design services, categories it had not previously claimed. Tesla and SpaceX call that filing opportunistic in their complaint, noting it arrived two months after Tesla’s public Terafab announcement and just days after Tesla’s own trademark applications went in.
Elon Musk launches TERAFAB: The $25B Tesla-SpaceXAI chip factory that will rewire the AI industry
By June 10, TERA-print was threatening to sue for federal trademark infringement, false designation of origin and unfair competition, the complaint states. Rather than wait to be sued, Tesla, SpaceX and SpaceXAI met with TERA-print six separate times between June and August trying to resolve the dispute directly. Those talks collapsed, and the companies filed for declaratory judgment this week in the U.S. District Court for the Western District of Texas, asking a judge to find that “Terafab” does not infringe TERA-print’s mark before TERA-print can file a claim of its own.
TERA-print isn’t backing down. The company told PCMag it discussed a settlement with Tesla as recently as September 2 and feels misled by what it called Tesla’s professed interest in settling. Its CTO, Andrey Ivankin, said TERA-print holds a Defense Department contract to fabricate semiconductors and partially owns Mattiq Inc., an AI company built on TERA-print’s products, and that the company will vigorously defend its rights.
Tesla and SpaceX argue the overlap is superficial. Terafab is planned as a $16.8 billion complex spanning roughly 100 million square feet at the Grimes County site SpaceX confirmed last month, built to produce chips for Optimus robots, Tesla’s AI computing needs and SpaceX’s orbital data center ambitions, a scale and purpose the companies say no reasonable consumer would confuse with a tabletop lab printer. TERA-print’s product line has stayed focused on lithography tools for biological and sensor research since it registered its mark in 2021.
The trademark fight is the second legal dispute tied to the Terafab project in the past week, following a separate SpaceX suit aimed at keeping company records about the facility out of public view, as KBTX reported. Whether construction proceeds under the Terafab name now depends on a federal judge in Austin.
In a new interview on Wednesday, Tesla uber bull Ron Baron said that anyone looking to buy the company’s stock should do so as soon as they can.
Baron, founder and CEO of Baron Capital and one of Tesla’s most persistent institutional bulls, used a CNBC Squawk Box appearance on Wednesday to deliver a familiar message with fresh urgency: In his opinion, Tesla stock is a buy:
“The time to buy the stock is now. FSD is catching on, and it’s going to be bigger and bigger. 55% of new buyers are buying it (Teslas) with FSD. It’s going to be everywhere. It’s safer.”
The Baron Capital frontman’s case is built around Full Self-Driving. Tesla reported 1.48 million active FSD subscriptions in the second quarter, up 56 percent year over year, and company officials have said roughly 55 percent of new North American deliveries left with a subscription enabled.
Baron framed that attach rate as proof the product is moving from enthusiast extra to default expectation, and as a reason software, not just vehicle volume, should drive the next phase of value.
His conviction on Tesla shares is not theoretical, as Baron Capital made its first Tesla investment in 2014, after years of meetings that began around the 2010 IPO roadshow. The firm later built a large SpaceX position starting in 2017.
Ron Baron today in new interview on Tesla:
“The time to buy the stock is now. FSD is catching on, and it’s going to be bigger and bigger. 55% of new buyers are buying it (Teslas) with FSD. It’s going to be everywhere. It’s safer.” pic.twitter.com/Rv5PB0bVZ2
— Sawyer Merritt (@SawyerMerritt) September 16, 2026
Baron said those Musk-led bets have generated about $30 billion of the $71 billion in profits Baron Capital has produced for clients. He put the firm’s current exposure at roughly $25 billion in SpaceX and $5 billion in Tesla. Personally, he described SpaceX as his largest holding, at about $5 billion, with about $1.5 billion in Tesla and additional Tesla exposure through the firm’s funds.
That concentration is also a statement of loyalty. Asked about talk of a SpaceX-Tesla combination, Baron said he had already walked Elon Musk through arguments for and against a deal, then declined to repeat them on air. His public position was simpler: “Whatever you decide is better is what I’m going to support,” he said to Musk.
Baron also said that he picked up the farewell edition of the Model S after Tesla decided to sunset the vehicle earlier this year, calling it his favorite car he’s ever driven.
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