Standard & Poor's has hit Tesla with an undesirable, junk level rating. They handed them an "unsolicited corporate credit rating" of a B-, calling the electric car manufacturer "vulnerable." They went on to say Tesla has a “narrow product focus [and] concentrated production footprint,” a short track record, and little visibility into the future market of its cars. Comparing it to other automotive manufacturers, S&P said Tesla was "small scale." Ouch, S&P. That one has got to hurt.
While they might be "small scale" to the S&P, Tesla has a $26 billion market cap. That's half of General Motors and just over one third of Ford.
Part of S&P's poor rating came from Tesla's long-term issues, such as a shortage of of the unique batteries that make their cars what they are. "We believe there is considerable uncertainty in Tesla’s long-term prospects and believe that the company is less likely to successfully adapt to competitive and technological displacement risks over the medium to long term,” says the S&P.
Hopefully, founder Elon Musk's move to build a "gigafactory" will help move Tesla up the S&P ratings scale. Musk hopes to "create manufacturing capacity that can withstand the demand for batteries as the company ratchets up its rate of production."
In the meantime... sorry, Tesla. I still think you make a great alternative to the Batmobile.
This article is from the archive of our partner The Wire.