Tesla Inc.\u2019s credit rating was downgraded by Moody\u2019s Investors Service on Tuesday as the electric car company burns through cash, fails to meet production expectations and may soon have to raise more than $2 billion. Moody\u2019s cut Tesla\u2019s overall rating to B3, or six levels below investment grade, from B2 and said its outlook on the company is negative. Tesla\u2019s $1.8 billion of senior unsecured notes, issued in August, were downgraded to Caa1, seven steps into junk, from B3. \u201cTesla\u2019s ratings reflect the significant shortfall in the production rate of the company\u2019s Model 3 electric vehicle,\u201d Moody\u2019s analyst Bruce Clark said in the report. \u201cThe company also faces liquidity pressures due to its large negative free cash flow and the pending maturities.\u201d A representative for Palo Alto, California-based Tesla declined to comment. It\u2019s a reversal for Chief Executive Elon Musk who convinced debt buyers less than eight months ago to pay a record-low yield of 5.3 percent on Tesla\u2019s debut bond sale amid high demand. Investors have since dumped the bonds on skepticism about Tesla\u2019s long-term outlook. Bloomberg\u2019s Model 3 production tracker estimates the company may be making about 975 of the cars a week, a far cry from the end-of-quarter target of 2,500 per week. \u2018High Risk\u2019 The unsecured bonds dropped 3.5 cents on the dollar to an all-time low of 89 cents on the dollar at 5:01 p.m. in New York, according to Trace bond price data. The new rating reflects \u201cvery high credit risk, poor standing,\u201d according to Moody\u2019s definitions. Before the ratings decision was announced, the company\u2019s shares fell 8.2 percent to the lowest in almost a year as analysts cast doubt on its ability to reach production goals. While Tesla continues to benefit from strong market acceptance of its cars and growing regulatory support, there\u2019s a risk that Tesla has to \u201cundertake a large, near-term capital raise in order to refund maturing obligations and avoid a liquidity short-fall,\u201d Moody\u2019s said. The company\u2019s cash needs may require a near-term capital raise of more than $2 billion, according to the credit firm. \u201cWhy would anybody buy the bonds? There is just no reason to buy the bonds.\u201d said Hitin Anand, senior analyst at CreditSights, about the company\u2019s $1.8 billion of notes due in 2025. \u201cYou\u2019re taking up equity-like risk and all you\u2019re getting is a 5.3 percent coupon.\u201d Tesla may choose to issue convertible notes or tap the secured loan market to meet its capital needs, Anand said. Moody\u2019s said Tesla\u2019s rating could continue to fall if the company continues to miss its Model 3 production targets, as well as if it\u2019s unable to raise new capital.