Tesla Debt Maturity Schedule, Cash And Credit Rating

Elon Musk, Tesla Factory, Fremont (CA, USA). Flickr Image.

This article presents the total debt and debt breakdown of Tesla (NASDAQ:TSLA).

Apart from the debt figures, we also look at the company’s cash, payments due, sources of liquidity as well as Tesla’s credit rating.

Let’s take a look!

Debt Definition

In Tesla’s quarterly and annual filings, Tesla disclosed all debt obligations, both current and long-term, in a table as shown below.

Tesla debt summary. Source: 2022 anual report

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There are multiple columns specified in the above table such as “Net Carrying Value”, “Unpaid Principal Balance”, “Unused Committed Amount”, “Contractual Interest Rates” and “Contractual Maturity Date”.

The “Unpaid Principal Balance” will be the main subject of our discussion in this article.

This column specifies the total payment due, which includes the amount of debt as well as the expected interest expenses.

The contractual interest rates basically refer to the interest rates of the issued debt whereas the maturity date or debt due date refers to the date when the debt comes due.

Also, the “Unpaid Principal Balance” includes both the current and long-term portions of the debt.

Keep in mind that the unpaid principal amount can fluctuate from quarter to quarter, depending on whether Tesla has paid down the debt or drawn on more debt.

Let’s look at the numbers.

Total Debt

Tesla total debt

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As of 2Q 2023, Tesla had about $1.5 billion of debt.

Of this amount, roughly $1 billion is categorized as the current portion and is expected to come due in the next 12 months starting from the end of fiscal 2Q 2023.

An interesting fact is that Tesla’s total debt had considerably come down in just 3 years since 2020.

Total Cash

tesla-cash-on-hand-and-investments

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Tesla carries a significant amount of cash as shown in the chart above.

As of 2Q 2023, Tesla’s total cash, which consists primarily of cash and cash equivalents as well as investments, came in at $23 billion USD.

More importantly, this figure has been on the rise over the years, illustrating the solid cash generation capability of the company.

Net Debt

Tesla net debt

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As Tesla has more cash than debt, its net debt was -$21.5 billion as of 2Q 2023.

This figure was much larger than the one reported a year ago, indicating the increasing amount of cash the company carried compared to debt.

Tesla vs SolarCity

Tesla Automotive vs SolarCity debt

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For your information, Tesla acquired SolarCity in 2016 for $2.6 billion USD.

Therefore, SolarCity debt was assumed from the acquisition in 2016.

As of 2023 Q2, Tesla’s automotive debt totaled $1.1 billion while the debt associated with SolarCity totaled even less, at only $408 million.

Over the years, Tesla has slowly paid off not only its own debt but also its solar-related debt.

The decreasing debt figures in both automotive and SolarCity demonstrate Tesla’s commitment to reducing its indebtedness in both the automotive and solar segment.

Finance And Operating Lease Liabilities

Tesla minimum lease payments 4Q 2021

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Apart from short and long-term debt, Tesla also carries finance and operating leases as shown in the diagram above.

My expectation is that leases will significantly increase Tesla’s debt levels.

To show that, I created the next chart that shows Tesla’s debt levels and the effect of leases on debt.

Impact Of Leases On Debt

Tesla debt and leases

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The plots above illustrate the impact of leases on Tesla’s debt levels.

As shown, leases, both operating and finance, have significantly bumped up Tesla’s debt figures.

As of 2Q 2023, Tesla’s total debt, inclusive of leases, grew from $1.5 billion to $6.3 billion, or more than a 4-fold increment.

Debt Vs Assets Growth

Tesla debt vs assets

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Compared to assets, Tesla’s debt levels are much lowers and have not grown as much as that of the assets.

This trend shows that the growth of Tesla’s assets does not primarily come from debt which is a sign of a well-run company.

Debt To Assets Ratio

tesla-debt-to-assets-ratio

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The plot above shows that Tesla’s debt-to-assets ratio has continued to slide, even in post-pandemic periods, illustrating the growing assets and/or the declining debt.

Again, the decreasing debt-to-asset ratio shows that debt has not been used to grow the asset base, a sign of a well-managed company.

Debt Vs Revenue Growth

Tesla debt vs revenue

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The plot above shows that Tesla’s revenue has grown much faster than its debt, another sign of a well-run company.

In this aspect, Tesla has relied less on debt to fuel its revenue growth.

Debt To Revenue Ratio

Tesla debt to revenue ratio

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Again, the decreasing ratio presented in the plot above shows that Tesla’s revenue grows much faster than its debt.

As seen from the chart, the ratio has been coming down over the years and reached only 0.07X as of 2Q 2023, a record low for Tesla.

The declining ratio illustrates Tesla’s surging revenue and/or the decreasing debt.

Debt Payment Due

Tesla’s total amount due is based on the results reported in the 2022 annual report.

Types of Debt	Amount Due In Billions
	FY2023	FY2024 And Thereafter
Debt	$1.02	$1.04
Operating Leases	$0.61	$2.54
Finance Leases	$0.53	$0.60
Total	$2.16	$4.18

For fiscal 2023 alone, Tesla’s total payment due is $2.16 billion USD, which primarily consists of debt and leases.

For fiscal 2024 and thereafter, Tesla’s total payment due is $4.18 billion USD, which also primarily consists of debt and leases.

The following quote is obtained from Tesla’s 2022 annual report about what comes due in the next 12 months:

• “As of December 31, 2022, we and our subsidiaries had outstanding $2.06 billion in aggregate principal amount of indebtedness, of which $1.02 billion is scheduled to become due in the succeeding 12 months.

  As of December 31, 2022, our total minimum lease payments was $4.28 billion, of which $1.14 billion is due in the succeeding 12 months.”

Does Tesla have the cash to cover the payment due in 2023 and thereafter?

We will find out in the next section.

Sources Of Liquidity

Tesla’s total liquidity is based on the result reported in the 2022 annual report.

Sources Of Liquidity	USD In Billions
	Committed Capacity	Available Capacity For FY2023
Cash & Cash Equivalents	–	$16.25
Short-Term Investments	–	$5.93
Credit Facilities	$2.42	$2.42
Operating Cash Flow	–	$10.72 (estimated)
Total	–	$35.32

Tesla’s sources of liquidity include cash and cash equivalents, short-term investments, and credit facilities from banks.

Apart from cash, investments, and credit facilities, Tesla also obtains its cash through operating activities.

Therefore, Tesla is estimated to have total liquidity of $35 billion USD for fiscal 2023 alone.

However, even with just its cash and cash equivalents, Tesla is able to pay off its entire debt payment due in 2023 as well as in 2024 and thereafter.

Therefore, based on the results reported at the end of fiscal 2022, Tesla is estimated to have enough liquidity to cover the $2.16 billion due in FY2023 and the entire $4.18 billion due in 2024 and thereafter.

The following quote shows what Tesla said about its liquidity in the 2022 annual report:

• “Accordingly, we believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following December 31, 2022, as well as in the long term.”

In short, Tesla should be able to meet its payment obligations all the way to fiscal 2024 and beyond.

Credit Rating

Tesla’s credit ratings as of 31 Dec 2022.

Rating Institutions	Types Of Indebtedness		Outlook
	Long-Term Debt	Short-Term Debt
Standard & Poor’s	N.A.	N.A.	N.A.
Moody’s	N.A.	N.A.	N.A.
Fitch	N.A.	N.A.	N.A.

As of 31 Dec 2022, Tesla did not publish any credit rating regarding its debt obligation in its 2022 annual reports.

Summary

To recap, Tesla’s debt has been on the decline and reached record lows in recent years.

Tesla has enough liquidity to meet its debt payment obligations.

Is Tesla’s $2 billion debt a cause for concern?

Definitely no.

References and Credits

1. All financial figures presented in this article were obtained and referenced from Tesla’s SEC filings, annual reports, earnings releases, investor presentations, etc, which are available in Tesla Investor Relations.

2. Featured images in this article are used under the creative commons license and sourced from the following websites: Bill Dickinson and Maurizio Pesce.

Disclosure

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