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.
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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.
SpaceX will report second quarter results after the market closes on Tuesday, August 4, marking the first time the company has opened its books to the public since its record IPO in June. Management will host a live audio only webcast at 4:30 p.m. ET, streamed on X, with no dial in option.
The debut carries more weight than a typical first quarter as a public company. Two trading days after the release, on August 6, the first tranche of SpaceX’s lockup expires, freeing roughly 911.5 million insider and employee shares, worth well over $100 billion at current prices and the largest such release in Wall Street history. A second, larger tranche tied to the stock trading 30 percent above its $135 IPO price never triggered, since shares have spent most of July trading below that price.
Wall Street’s models point to revenue near $6.9 billion for the quarter, up sharply from the $4.69 billion SpaceX reported in the first quarter, with a narrower per share loss than the $1.27 posted three months earlier, according to estimates compiled by Motley Fool. Those numbers will be the first look at how SpaceX’s three segments, Starlink, launch and AI, are performing independently.
SpaceX scores another massive Pentagon deal to support military satellites
Investors heading into the call have a specific list of questions. How many net new Starlink subscribers did SpaceX add after ending March with 10.3 million, and is average revenue per user holding up as the service expands into lower income markets. How much of the AI segment’s revenue reflects contract signings with Anthropic, Google and Reflection AI this year, deals that combined could annualize to nearly $28 billion if fully ramped. Whether capital expenditures, which nearly doubled in the AI segment alone between 2024 and 2025, are still accelerating or starting to plateau. And whether management offers any forward guidance at all, something SpaceX has never done publicly.
The report will also land days after Elon Musk publicly denied a Wall Street Journal report describing internal planning to separate Tesla’s China business ahead of a potential Tesla-SpaceX merger. Whether Musk or SpaceX executives address that speculation on the call, even indirectly, maybe something investors will be listening for on Tuesday.
As Teslarati reported after Musk’s own warning to short sellers last week, the CEO has made clear he expects skeptics to be proven wrong over time. Tuesday will be the first chance for the numbers themselves to make that case.
Elon Musk
Tesla AI boss reveals how big Optimus is going to get
Tesla’s Optimus chief corrected himself on X, confirming a staggering 10 million robot production target.
![Tesla Optimus Gen 3 [Credit: Tesla]](https://www.teslarati.com/wp-content/uploads/2026/03/tesla-optimus-gen3-diner.jpg)
Tesla’s Optimus program has a new number attached to it, after Ashok Elluswamy, the executive who has run the humanoid robot program since June 2025, posted a three word correction on X Thursday, “Correction, 10 million robots.”
The line clarifies the long term annual capacity Tesla is building toward its planned second Optimus production line at Gigafactory Texas, a figure Musk has cited repeatedly since last year’s shareholder meeting.
The scale is worth noting, because ten million robots a year would mean Tesla building more units annually than most countries sell in new cars. Tesla has framed this as a second line, not the first. The buildout is happening in two phases: a roughly one million unit per year line inside Tesla’s Fremont factory, installed on the floor space vacated when Model S and Model X production ended earlier this year, and a much larger dedicated facility under construction at Giga Texas that broke ground on its first steel structure in May. That Texas facility is the one Elluswamy’s correction refers to, and is expected to reach volume production sometime in 2027.
Correction, 10 million robots https://t.co/0z4nyQNTzp
— Ashok Elluswamy (@aelluswamy) July 30, 2026
Tesla Optimus project fires up as Musk sees production line progress
Elluswamy took over Optimus from Milan Kovac last summer and has spent the months since talking up the program’s trajectory. Elon Musk has also floated the ten million figure at Tesla’s 2025 shareholder meeting.
Ending Model S and Model X production to make room for the first Optimus line was one of the more consequential manufacturing decisions in the company’s recent history, retiring two flagship vehicles in favor of a robot that has yet to enter mass production. Musk has previously estimated per unit production costs at $20,000 to $25,000 once Tesla reaches a million units a year, though he hasn’t said what that cost looks like at ten times the volume.
SpaceX just picked up another $1.6 billion from the Pentagon, with the U.S. Space Force awarding two task orders worth $1.6 billion to fly 18 Falcon 9 missions from Vandenberg Space Force Base in California through the end of 2027. The launches will carry satellites for the Space Based Sensing and Targeting portfolio, a set of programs meant to help the military detect and track airborne threats and relay that information across forces in near real time.
The award falls under National Security Space Launch Phase 3 Lane 1, the Space Force’s faster, commercial style procurement track for missions that do not require the military’s most demanding certification process. It is also the largest single order publicly disclosed under that program so far, and the first task order issued since the Space Force nearly tripled Lane 1’s contract ceiling from $5.6 billion to $17 billion on July 17.
SpaceX to become America’s Military data backbone for missiles, drones, and warfighters
Eric Zarybnisky, the Space Force’s acting portfolio acquisition executive for space access, said the entire process, from identifying the requirement to signing the contract, took about two months, including a month set aside for companies to prepare proposals.
SpaceX is not just launching these satellites. It already holds the contracts to build two of the programs within the same portfolio, $4.16 billion for the Space Based Airborne Moving Target Indicator system and $2.29 billion for the Space Data Network Backbone, which Teslarati covered in May. That means SpaceX is now responsible for both building key pieces of the military’s next generation sensing network and getting them into orbit.
With this latest award, SpaceX’s Pentagon contract total for 2026 alone tops $8 billion, adding to a defense portfolio that already includes the Golden Dome missile defense software group SpaceX joined in April and a string of GPS launches it inherited after ULA’s Vulcan rocket ran into a booster anomaly, which we detailed in March.
Lane 1’s vendor pool technically includes seven companies: SpaceX, ULA, Blue Origin, Rocket Lab, Stoke Space, Impulse Space, and Relativity Space. In practice, SpaceX remains the only provider with the combination of launch cadence, flight proven Falcon 9 hardware, and West Coast infrastructure to support a campaign requiring roughly one Vandenberg launch a month for the next year and a half.
Some lawmakers have flagged the growing concentration of national security launches with one company as a risk worth watching. For now, the Space Force keeps backing SpaceX, with it being the company that shows up ready to launch.
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