Tesla Finance is going to tap the securitization market for $887.5 million, pledging revenue from lease contracts to repay the bonds, but with a stream of risks, including lower collateral quality and model concentration.
It is Tesla's first sponsored securitization of the year, and the first where the issuer is incorporated in Texas.
Tesla Lease Electric Vehicle Securitization, series 2025-A, will sell class A, B and C notes. The class A1 notes mature on Oct. 20, 2026, and the A2 tranche, which contains the bulk of the underlying assets, 31.3%, matures in June 20, 2028, according to Moody's Ratings and Fitch Ratings.
The rest of the notes mature in May and June of 2029, according to Moody's. All the class A notes benefit from total initial hard credit enhancement representing 26.7% of outstanding assets. Classes B and C, which provide subordination to the senior notes, benefit from 21.02% and 16.%, respectively.
The deal will issue fixed rate notes, primarily, and the A2B tranche could issue notes with spreads over the three-month Secured Overnight Financing Rate (SOFR), according to rating agencies.
Credit Agricole Securities is the lead underwriter, joined by names including
The credit enhancement package includes 15.5% in initial overcollateralization and a non-declining 0.50% in initial reserves, Moody's said. As the pool amortizes, enhancement increases as a percentage of remaining assets, something that Moody's perceives as a positive.
Recent vintages of Tesla leases, specifically 2024, had slipped into weaker performance territory recently, Moody's said. Since Tesla Finance originated 91% of the pool between Q3 2024 through Q2 2025, the rating agency increased its credit loss expectation for the deal by 0.75%, compared to the expected loss level in TALT 2024-B.
Lessors had a weighted average (WA) FICO score of 741, with a remaining term of 27, and leases have an average remaining securitization value of $31,770.
Leases on Model Y sport utility vehicle and the Model 3 make up TLEVS 2025-A's entire securitization value, Moody' said. The BEVs are exposed to the risk of technology going obsolete, which could reduce the resale value of older Tesla vehicles, according to the rating agency.
Moody's assigns P1 to the A1 notes; Aaa to the A2 through A4 notes; Aa2 to the class B notes; and A2 to the class C notes. Fitch assigns ratings of F1+ to the A1 notes; AAA to the A2 through A4 tranches; AA to the class B notes and A to the class C notes.
