While Tesla Motors' Model S is a piece of pristine, well-designed metal, the company's bonds have now been rated as "junk." But maybe that's better than the other way around. We'll let the investors decide.

Standard & Poor's gave Tesla's bonds a 'B-' rating this week, indicating so-called "junk status," Automotive News says. That means investors are saying the company has a relatively high chance of defaulting on its loans. S&P cites Tesla's short history, competition from some very large companies and relatively narrow product line (none of which are new facts), and estimates that investors would be able to recover 30 to 50 cents on the dollar should the company default.

Tesla has been issuing billions of dollars in bonds this year to raise funds for its planned gigafactory somewhere in the southwestern US, a project that Tesla estimated will cost $5 billion ($2 billion from Tesla, $3 billion from partners). Tesla said earlier this month that it took a first-quarter loss of $49.8 million, compared to year-earlier net income of $11.2 million. While revenue rose 10 percent to $620.5 million, selling and administrative costs more than doubled while research and development costs jumped 48 percent. And while Tesla's share price has doubled during the past 12 months (it's at around $209 today), the company's liabilities doubled to $3.52 billion from the beginning of the year to the end of the first quarter. There's a short video on the situation from CNN Money below.



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  • 243 Comments
      Joeviocoe
      • 1 Year Ago
      http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a0k7AQ0W1X2c "April 14 (Bloomberg) -- Standard & Poor’s and Moody’s Investors Service defended their compensation structures amid criticism from regulators that being paid by investment banks to assign credit ratings creates a conflict of interest." It is already known that "unsolicited ratings" are generally much lower than solicited ratings. And I know that TSLA Shorts are floating very high as of late
      Weapon
      • 1 Year Ago
      Dropped to? Tesla did not have any rating in the first place so how could they drop? Realistically speaking, this is an unsolicited rating which means the S&P has no background or inside information on Tesla. Which makes this rating pretty much worthless. That said, even if they did have inside info, that didn't help much when they rated AIG and Lehman Brothers as AAA prior to bankruptcy.
      CoolWaters
      • 1 Year Ago
      Seems to be a rule here, the more right wing the CEO, the more Incompetent. At least in terms of innovation.
      CoolWaters
      • 1 Year Ago
      Seems to be a rule here, the more right wing the CEO, the more Incompetent. At least in terms of innovation.
      CoolWaters
      • 1 Year Ago
      Seems to be a rule here, the more right wing the CEO, the more Incompetent. At least in terms of innovation.
      CoolWaters
      • 1 Year Ago
      Seems to be a rule here, the more right wing the CEO, the more Incompetent. At least in terms of innovation.
      kerrlakeroo
      • 7 Months Ago
      Another Porkulus money farce. $7500 tax credit, a half Billion dollar gift from the white house all to be the next biggest loser.
        Joeviocoe
        • 7 Months Ago
        @kerrlakeroo
        White House got that "gift" (really a loan) back early, with Interest. That is $7500 dollars that a taxpayer WON'T have to pay, since it is a credit based solely on taxes that would have been paid, but are instead kept.
          EVnerdGene
          • 7 Months Ago
          @Joeviocoe
          @Grandal So if the Space Shuttle cost $2B* per launch, and usually took about six people; that's $333M per person. However, some were round-trip crew (stewardesses, drivers, and such), so really couldn't count maybe three of the six as deliverables. So that makes it about $666M per deliverable. Compared to $72M the Russians are charging us ??? Hmmm, maybe we shouldn't complain. I wonder if the Chinese could do it for even less? We should put it out for bids. *btw: I think the shuttle was closer to $1B. But WTF; a billion here a billion there . . . .
          Grendal
          • 7 Months Ago
          @Joeviocoe
          No one is close to SpaceX prices now, even China. With reusability it won't even be in the ball park. Everyone else will be 20 to 100 times more expensive.
          Joeviocoe
          • 7 Months Ago
          @Joeviocoe
          Sorry for your experience there with that guy. Not everyone thinks that there will be Armageddon that causes 1% to be chosen to flee leaving the rest... there probability suggests we will know of pending disaster decades ahead of time... and can plan accordingly to avert it. But SpaceX and Musk have a clear ideology that says that mankind should be a multiplanetary species that doesn't have to wait for a disaster to force us to make stupid decisions about who stays or goes.
          Joeviocoe
          • 7 Months Ago
          @Joeviocoe
          Sorry for your experience there with that guy. Not everyone thinks that there will be Armageddon that causes 1% to be chosen to flee leaving the rest... there probability suggests we will know of pending disaster decades ahead of time... and can plan accordingly to avert it. But SpaceX and Musk have a clear ideology that says that mankind should be a multiplanetary species that doesn't have to wait for a disaster to force us to make stupid decisions about who stays or goes.
          EVnerdGene
          • 7 Months Ago
          @Joeviocoe
          I hope the $192B includes development costs, not just operational. "That is the future of humanity " This statement is scary to me. Had a co-worker (AF space program) that used to say stuff like that. He claims man will have to leave earth to survive. Lots of late-night discussions about the feasibility, , , Then I asked him who would go - started sounding like a nazi. That might have been the start of me being a tree-hugger; albeit often wildly misguided and mal-informed. Me thinks we should not poop in our nest, cause I'm never gonna be a chosen one.
          gynextdoor
          • 7 Months Ago
          @Joeviocoe
          You're correct; in 2013 Tesla did pay back the loan they got from the U. S. Government in 2010. Interestingly, the Fremont, California, Tesla Plant is a four minute drive from Solyndra, which filed bankruptcy and defaulted on the $527 million dollar government loan. Elon Musk wanted a big government contract for his Space-X company, so early payback of the Tesla loan would put him in a good light with the government.
          Grendal
          • 7 Months Ago
          @Joeviocoe
          I understand. I say humanity as a factual statement because, for me, it is inevitable. We have 7 billion humans on this one planet. How many more can you have before you begin to run out of usable space? As you have more and more people then resources become more and more scarce. The choice is simple you limit your population or you move to where you have more resources and space. Where on this planet is that going to happen? Getting off the planet solves a whole lot of issues that happen because of overpopulation. Space has lots of space and plenty of resources. The problem is that it is a very harsh environment that is hard to live in. Staying on the planet and limiting your population (like China tried to do) generates a whole lot of problems too with freedoms being curtailed to keep population down. All this might take hundreds of years but you have to start sometime.
          Grendal
          • 7 Months Ago
          @Joeviocoe
          Looks like the real number was right between our numbers: "With 134 missions, and the total cost of US$192 billion (in 2010 dollars), this gives approximately $1.5 billion per launch over the life of the program." from: http://en.wikipedia.org/wiki/Space_Shuttle_program
          Grendal
          • 7 Months Ago
          @Joeviocoe
          The Shuttle was not cost effective. It was supposed to be reusable and save taxpayers money. The reality was that it wasn't reusable except for PR purposes. It did achieve a lot of things but just sending stuff directly up to orbit in capsules would have been a lot cheaper. It's one of those funny things about movies is that they inspire people. A lot of people saw 2001 and said "that is the future." The movie had a shuttle and so that became the thing we had to have even though it was impractical. If SpaceX can achieve reusability then space will open up as an industry. That is the future of humanity and it was vitally necessary for it to become moderately reasonable to get stuff into orbit. From there you have the solar system and then the rest of the universe. There is a vast amount of money to be made in space.
          Grendal
          • 7 Months Ago
          @Joeviocoe
          Everyone complains about Solyndra. The problem is that then they miss the really big rip offs. Take SpaceX and that reference you made about government contracts. Do you understand that SpaceX is the least expensive launch company? A lot cheaper than the company that the Air Force uses now. A whole lot cheaper. In fact by using SpaceX instead of ULA we taxpayers would save $10 billion. So about 20 Solyndras. Here's another little savings that SpaceX could do for you: the USA currently pays the Russians $72 million per astronaut to send to the ISS. SpaceX, an American company, could send seven astronauts for the same money. That's $55 million PER astronaut. So SpaceX has the ability to save you, as a taxpayer, an enormous amount of money. Considering the Space Shuttle cost an average of $2 billion per launch, the three resupply missions for a mere $60 million a piece saved you $5.82 billion. Any questions?
          Joeviocoe
          • 7 Months Ago
          @Joeviocoe
          Everything is close in a Valley... i.e. Silicon Valley. It is the largest concentration of Tech firms anywhere. The Internet you are using, likely owes something to a company within 4 minutes of Tesla's factory. And FYI, SpaceX was in business with government contracts before Elon Musk was even part of Tesla Motors.
          Grendal
          • 7 Months Ago
          @Joeviocoe
          The $192 billion did include development costs.
          Joeviocoe
          • 7 Months Ago
          @Joeviocoe
          Everything is close in a Valley... i.e. Silicon Valley. It is the largest concentration of Tech firms anywhere. The Internet you are using, likely owes something to a company within 4 minutes of Tesla's factory. And FYI, SpaceX was in business with government contracts before Elon Musk was even part of Tesla Motors.
      larry
      • 7 Months Ago
      Another one of Obama's great choices to invest the American Taxpayer money. Cash for Clunkers, General motors, School lunch program, Solyndra, shovel-ready, and General Electric also were other mistakes, to mention a few.
        Grendal
        • 7 Months Ago
        @larry
        Get mad at Ford who still owes the American taxpayer $5.7 billion. Tesla paid back their loan in full, with $26 million in interest. By the way, the ATVM loan program was created by the Bush Administration - look it up.
          Grendal
          • 7 Months Ago
          @Grendal
          We've had the discussion before and agreed to disagree. In my mind, the program and what it was intended to do, was created by the Bush Administration. They allocated the $25 billion for the program. The fact that the Obama Administration signed off on who got the money was beside the point of the fact that money was allocated to be spent. I am also not trying to say that the Right is bad and the Left is good. My point to a true believer Right winger is that they like to spend money too so focus on real wasteful dollars instead of talking point anti "green" mantra. Find some other program that had wasteful spending by Obama's Administration and I won't argue about it. This particular program I point the finger mostly at Bush's Administration.
          EVnerdGene
          • 7 Months Ago
          @Grendal
          "the ATVM loan program was created by the Bush Administration " The ATVM loan program was created during the Bush Administration. So what is your point ? None of the loans were approved, nor disbursed while Bush was still in office. Why do you keep telling the same half-story every time the ATVM is brought up ? Telling only half a story is the same as telling a lie.
          EVnerdGene
          • 7 Months Ago
          @Grendal
          The ATVM program had good intentions. From the beginning I thought $25B was way too much. Should have been seed money, not finance an entire enterprise or product line. Hundreds of companies applied that really needed seed funds for what might have been something very innovative. Instead ? Ford and Nissan - hey you are big boys - raise your own damn funds, like with bonds? Handicapped vehicles ? - I think you guys have the wrong program (btw: only a measly $50M blown on that one) Tesla - have proven very good at raising funds in private markets. Frisker - stunk on every level - technical merit, business model, cronyism. 3rd paragraph - http://www.thecuttingedgenews.com/index.php?article=52975pageid=37pagename=PageOne more credible source ? - http://abcnews.go.com/Blotter/car-company-us-loan-builds-cars-finland/story?id=14770875 Solyndra - weren't they turned-down for a loan before administration change ? waste and corruption in the past five years? - oh, what's the use, I could sit here all day listing pure national debt funded crappola
        Joeviocoe
        • 7 Months Ago
        @larry
        Most of that was Bush
      • 1 Year Ago
      ????????? NEVERMIND I already know why.......................
      LA is Best
      • 1 Year Ago
      Hey, NO PROBLEM, The government will bail Tesla out with your tax dollars because they have a friend in oBOMBa!!
      mg1polo
      • 7 Months Ago
      Hi priced JUNK!
      buckeye3118
      • 1 Year Ago
      Another Al-Jazeera GoreMobile doesn't live up to the hype. No surprise.
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