Tesla’s fundamental credit factors should improve in 2021 as the company continues to reduce its debt burden and increase profits. The company currently has negative net debt. We expect the company’s free cash flow at the end of this year to be $ 1.5-2 bn, even taking into account the growth of the investment program.
We see increased competition in the electric vehicle market as the main short-term risks for the company, as both classic manufacturers (Volkswagen, Daimler, Jaguar Land Rover and Ford) and new players in the industry (Nio, Li Auto, Lordstown Motors and Fisker) are actively developing their product lines and bring new models of electric vehicles to the markets. Nevertheless, we believe that Tesla’s vertically integrated business structure, as well as high production scale, should help the company maintain its leading position in the global market, at least in the medium term. The issuer’s dollar Eurobonds maturing in 2025 (USU8810LAA18) offer a yield of 4.3%.
Founded in 2003, the company designs, develops, manufactures, and markets high-performance, technologically advanced electric cars and solar energy generation and energy storage products. Tesla sells more than five fully electric cars, among others, the Model S sedan and the Model X SUV, and the Model 3 sedan. The company has a growing global network of Tesla Superchargers, which are industrial grade, high-speed vehicle chargers, typically placed along well-traveled routes and in and around dense city centers to allow Tesla-owners quick and reliable charging. Tesla offers certain advanced driver assist systems under its Autopilot and Full Self-Driving options. US customers generate nearly half of Tesla’s sales.