Elon Musk Feuds With Moody's Over Demand For Top Rating Tesla

The CEO of Tesla CEO Elon Musk has not hesitated in attacking the Securities and Exchange Commission (SEC) with which he has had a stormy relationship since his now infamous tweet of Aug. 7, 2018, in which he announced that he was going to take the manufacturer of electric vehicles private, Luc Olinga reported for The Street.

Photo Insert: Musk and Tesla fans believe that the rating of the world leader in electric vehicles should be one of the best possible at Moody's, in other words, AAA.

Musk's message prompted an investigation by the SEC, which found out that Musk lied since he had no money to spend in taking Tesla private.

The CEO was fined $20 million, stepped down as chairman of the board, and the group had to review all his tweets that could influence Tesla's stock price. Tesla was also fined $20 million. Musk has been trying to have the settlement overturned as he claims that his First Amendment rights were violated.

He went to court claiming that the SEC used the agreement to "launch endless, boundless” investigations of his public statements in a vain argument that his big mouth and uncouth behavior cannot be checked.

In April, a New York federal judge told Musk in a ruling that he would not end the agreement that called for him to have his social media posts approved by a company attorney if they consisted of material information about Tesla.

“None of the arguments hold water,” Judge Lewis J. Liman of the US District Court for the Southern District of New York wrote in a ruling, in effect telling Musk to stop lying and acting like an overgrown brat.

Musk fumes because Moody’s rated Tesla as average while the loquacious Tesla CEO insists his company is the sixth company in the world in terms of market capitalization with a market value of $847 billion.

"Moody’s is irrelevant," Musk said on Twitter on Sept. 2. In January, Moody's upgraded Tesla's rating by two notches to Ba1 from Ba3 previously, and the outlook was positive. Musk and Tesla fans believe that the rating of the world leader in electric vehicles should be one of the best possible at Moody's, in other words, AAA.

They point out that Apple, which is rated AAA by the rating agency, depends heavily on the iPhone.

"How many products does Apple make. Like 4. This is absurd. Teslas total dominance is the true qualitative issue," said Tesla investor Ross Gerber. I guess they rejected AAPL then since majority of revenue comes from the iPhone," added another Twitter user.

But Moody’s also warned that Tesla is too dependent on the entry-level Model 3 sedan and the Model Y SUV/crossover, which accounted for about 94% of the 254,695 vehicles Tesla delivered in the second quarter ended June 30.

"Moody's expects that a more competitive offering of battery electric vehicles by other automakers could start to exert some pressure on margins in 2023."

It also noted that Tesla is heavily dependent on its China production base and recurrent lockdowns and strict monitoring have choked Musk’s plan to flood the world with his cars. Worse, he had to publicly apologize before noodle-gorging Chinese about the technology used in his cars that can monitor military bases and the breakdowns of his supposedly trouble-free cars.

At any rate, critics said Musk can organize his own rating agency and maintain his AAA rating every day.

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