By David Shepardson
NEW YORK (Reuters) - Tesla (NASDAQ:TSLA) Inc shares fell sharply again on Wednesday, reeling from a credit downgrade of the electric car maker by Moody's Investors Service, federal probes of a fatal crash and concerns about Model 3 production.
Shares tumbled 9 percent before ending down 7.7 percent at $257.78. On Tuesday, Tesla tumbled 8.2 percent to its lowest close in almost a year after the U.S. National Transportation Safety Board (NTSB) opened a field investigation into a fatal crash and vehicle fire in California on March 23.
On Wednesday, a second federal regulator, the National Highway Transportation Safety Administration (NHTSA), said it was sending a team to California to investigate the crash.
Late on Tuesday, Moody’s Investors Service downgraded Tesla’s credit rating to B3 from B2, citing "the significant shortfall in the production rate of the company’s Model 3 electric vehicle.” It also noted “liquidity pressures due to its large negative free cash flow and the pending maturities of convertible bonds.”
Tesla has $230 million in convertible bonds maturing in November 2018 and $920 million in March 2019.
Moody’s said its negative outlook “reflects the likelihood that Tesla will have to undertake a large, near-term capital raise in order to refund maturing obligations and avoid a liquidity shortfall.”
It said Tesla's weekly production target is now 2,500 Model 3 vehicles by the end of March, down sharply from its year-earlier target of 5,000 per week by the end of 2017. Tesla's weekly target for the end of June is 5,000.
Tesla declined to comment on the downgrade. The company plans to provide an update on Model 3 production next week.
Tesla shares have experienced big swings in the past, as worries about losses have vied with enthusiasm for Chief Executive Elon Musk's ambitious plans.
The sell-off has left Tesla's stock market value at $44 billion, below General Motors (NYSE:GM) Co's $49 billion. Palo Alto, California-based Tesla has at times had a larger market value than GM, the largest U.S. automaker by vehicle sales.
Since the end of February, the median analyst price target for Tesla has dipped by $10 to $356, about 37 percent higher than Wednesday's price, according to Thomson Reuters data. Nomura Securities analyst Romit Shah has the highest Tesla price target, $500, or nearly double the current price. All the targets were set before the March 23 crash.
In last week’s accident in which the Tesla struck a highway median, it was unclear if the vehicle’s automated control system called Autopilot was driving, the NTSB and police said.
The 38-year-old driver of the Tesla died at a nearby hospital shortly after the crash.
Late Tuesday, Tesla said in a blog post it does "not yet know what happened in the moments leading up to the crash," but added that data shows Tesla owners have driven the same stretch of highway with Autopilot engaged "roughly 85,000 times ... and there has never been an accident that we know of." The statement did not say if the crashed vehicle was in Autopilot mode.