Moody’s Investors Service on Tuesday downgraded Tesla’s debt further into junk territory, citing production delays with the Model 3 and warning the company would need more than $2 billion in fresh capital to cover its operating cash burn.

Moody’s said it had lowered Tesla’s bond rating a notch to B3 from B2 to “reflect the significant shortfall in the production rate of the company’s Model 3 electric vehicle.”

It also noted that the car maker “faces liquidity pressures due to its large negative free cash flow and the pending maturities of convertible bonds ($230 million in November 2018 and $920 million in March 2019).”

Tesla had $3.4 billion in cash at the end of last year. But Moody’s predicted it would need $2 billion this year to cover operating costs as it scales up production of the Model 3. With the $1.2 billion of debt maturing by early next year, and the need for a cash cushion of at least $500 million, Tesla will have to return to the financial markets, the rating agency predicted.

The company raised a more-than-expected $1.8 billion in August for an eight-year junk bond offering to fund accelerated production of the Model 3 sedan. In trading Tuesday, the bond fell to an all-time of 90.8 cents just ahead of the Moody’s announcement.

Tesla shares dropped 8.2% on Tuesday to $279.18. The stock is now down 28% from the record high reached in September and in bear market territory.

“Traders have been betting heavily against the electric car maker’s bonds amid growing worries about the electric car maker’s ability to deliver on its production goals,” CNBC reported.

Tesla has pushed back its target twice for reaching a production rate of 5,000 Model 3s a week, and now predicts it will reach that level by the end of June. It produced only 2,425 Model 3s during the fourth quarter of 2017.

“Prospects for addressing its liquidity requirements (whether equity, convertible notes or debt) will be supported if the company can establish credibility for reaching Model 3 production levels,” Moody’s said.

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