Fitch grants Tesla a BBB rating for the first time, outlook stable

Fitch Ratings has assigned Tesla (TSLA.US) a long-term Issuer Default Rating (IDR) of “BBB” for the first time, with a stable outlook. The agency pointed out that this rating reflects Tesla's strong market position as a global leader in pure electric vehicles, as well as its strategic focus on transitioning into a physical artificial intelligence company. Fitch expects Tesla's pure electric vehicle business to continue to maintain strong profitability, but notes that as the company rapidly ramps up major investments in artificial intelligence, profit margins may decline in the coming years. These investments will also require a substantial increase in capital expenditures, which could push mid-term free cash flow (FCF) into negative territory. This heavy investment cycle may increase the company's debt. Fitch forecasts that Tesla's capital expenditure in 2026 will exceed $25 billion, more than three times the 2025 level, with R&D spending also set to rise. Most of the spending will be used to support the construction and training of the Cortex 2 artificial intelligence supercomputer, which forms the foundation for Tesla's future FSD, Robotaxi, and Optimus humanoid robot programs.