Investing.com - Tesla (NASDAQ:TSLA)'s ability to meet its Model 3 sedan production goal on a sustained basis is key to the cash-burning company's ability to raise new capital.
The automaker has $1.15 billion dollars in convertible debt coming due in the next 10 months: $230 million in November and $920 million in March 2019.
"If they do need to raise capital, having a reasonable run rate for production of the model 3 will make a difference," says Bruce Clark of Moody's Investor Service.
Tesla's inability to meet its production target prompted Moody's to downgrade the company's debt in March, at which time it also lowered its credit outlook. The ratings service warned that it could do it again if there are shortfalls from Tesla's new, lowered production target of 2,500 vehicles a week.
With interest rates on the rise, Tesla will want as much credibility as possible when it's time to raise more money, because higher borrowing costs are already a given.