Investor's Corner
Tesla’s debt rating moves closer to ‘investment grade’ following S&P boost
Tesla (NASDAQ: TSLA) had its debt ratings raised by the S&P Global Ratings on Monday from B+ to BB-. As a result, the electric automaker sits just two notches from “investment grade” ratings.
According to spglobal.com, the BB rating is “less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.” BBB is needed to achieve “investment grade.”
The S&P listed several reasons for the boost in rating in a statement on Monday. “Improved execution, increasingly efficient production, and global expansion continue to strengthen the company’s competitive position,” the S&P said.
Indeed, Tesla has proven itself to be a continuous learner in terms of execution, production, and expansion. In execution, Tesla put its sizeable team to work in Q3, which led to a record quarter in terms of vehicle deliveries. 139,300 vehicles made it to consumers during 2020’s third quarter. This number was one of the direct reasons for the upgrade, MarketWatch reported.
In production, Tesla is adding lines in Fremont, preparing for the Model Y’s initial push in China, and working on manufacturing improvements to create a better product. CEO Elon Musk has been focused on increasing the effectiveness of Tesla’s manufacturing process this year. During the Q2 Earnings Call, Musk asked that anyone with a passion for manufacturing apply to work for Tesla.
-->“I just want to be clear, at Tesla, we love manufacturing. It’s awesome, and I really think more smart people should be working on manufacturing,” Musk said during the call.
The manufacturing focus that Tesla has emphasized has also helped in its ramp of the Model Y crossover. The accelerated adaptation that Tesla has applied to the manufacturing process of the Model Y has also contributed to the boosted ratings.
“This ramp up in production was significantly faster than its initial Model 3 ramp up, which took over nine months to reach the same weekly rate. We expect further improvements in efficiency, cost, and technology as Tesla builds on lessons learned from prior factories,” the S&P added.
Finally, Tesla’s international presence has been a crucial part of the company’s year-over-year growth. With Giga Shanghai in China manufacturing 12,212 in the span of 20 days last month to keep up with demand, Tesla has become the most popular EV brand in China.
Additionally, Tesla is building a new manufacturing facility in Germany, known as Giga Berlin, which will be completed and operational by Summer 2021. The electric automaker is also rumored to be in talks with India’s Government, looking to ramp its presence in the second-largest country in the world.
-->While Tesla’s annual goal for deliveries remains at 500,000, the S&P expects the company to finish 2020 with more than 470,000. The future outlook is bright, however, as the S&P believes sales could reach more than 800,000 units total beginning next year.
At the time of writing, TSLA shares were trading at $447.60, up 3.13% during the session.
Disclaimer: Joey Klender is a TSLA Shareholder.
Investor's Corner
Mizuho keeps Tesla (TSLA) “Outperform” rating but lowers price target
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected.
Mizuho analyst Vijay Rakesh lowered Tesla’s (NASDAQ:TSLA) price target to $475 from $485, citing potential 2026 EV subsidy cuts in the U.S. and China that could pressure deliveries. The firm maintained its Outperform rating for the electric vehicle maker, however.
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected. The U.S. accounted for roughly 37% of Tesla’s third-quarter 2025 sales, while China represented about 34%, making both markets highly sensitive to policy shifts. Potential 50% cuts to Chinese subsidies and reduced U.S. incentives affected the firm’s outlook.
With those pressures factored in, the firm now expects Tesla to deliver 1.75 million vehicles in 2026 and 2 million in 2027, slightly below consensus estimates of 1.82 million and 2.15 million, respectively. The analyst was cautiously optimistic, as near-term pressure from subsidies is there, but the company’s long-term tech roadmap remains very compelling.
Despite the revised target, Mizuho remained optimistic on Tesla’s long-term technology roadmap. The firm highlighted three major growth drivers into 2027: the broader adoption of Full Self-Driving V14, the expansion of Tesla’s Robotaxi service, and the commercialization of Optimus, the company’s humanoid robot.
“We are lowering TSLA Ests/PT to $475 with Potential BEV headwinds in 2026E. We believe into 2026E, US (~37% of TSLA 3Q25 sales) EV subsidy cuts and China (34% of TSLA 3Q25 sales) potential 50% EV subsidy cuts could be a headwind to EV deliveries.
-->“We are now estimating TSLA deliveries for 2026/27E at 1.75M/2.00M (slightly below cons. 1.82M/2.15M). We see some LT drivers with FSD v14 adoption for autonomous, robotaxi launches, and humanoid robots into 2027 driving strength,” the analyst noted.
Tesla stock (NASDAQ: TSLA) has landed an elusive “must own” status from Wall Street firm Melius, according to a new note released early this week.
Analyst Rob Wertheimer said Tesla will lead the charge in world-changing tech, given the company’s focus on self-driving, autonomy, and Robotaxi. In a note to investors, Wertheimer said “the world is about to change, dramatically,” because of the advent of self-driving cars.
He looks at the industry and sees many potential players, but the firm says there will only be one true winner:
“Our point is not that Tesla is at risk, it’s that everybody else is.”
The major argument is that autonomy is nearing a tipping point where years of chipping away at the software and data needed to develop a sound, safe, and effective form of autonomous driving technology turn into an avalanche of progress.
Wertheimer believes autonomy is a $7 trillion sector,” and in the coming years, investors will see “hundreds of billions in value shift to Tesla.”
A lot of the major growth has to do with the all-too-common “butts in seats” strategy, as Wertheimer believes that only a fraction of people in the United States have ridden in a self-driving car. In Tesla’s regard, only “tens of thousands” have tried Tesla’s latest Full Self-Driving (Supervised) version, which is v14.
Tesla Full Self-Driving v14.2 – Full Review, the Good and the Bad
When it reaches a widespread rollout and more people are able to experience Tesla Full Self-Driving v14, he believes “it will shock most people.”
Citing things like Tesla’s massive data pool from its vehicles, as well as its shift to end-to-end neural nets in 2021 and 2022, as well as the upcoming AI5 chip, which will be put into a handful of vehicles next year, but will reach a wider rollout in 2027, Melius believes many investors are not aware of the pace of advancement in self-driving.
Tesla’s lead in its self-driving efforts is expanding, Wertheimer says. The company is making strategic choices on everything from hardware to software, manufacturing, and overall vehicle design. He says Tesla has left legacy automakers struggling to keep pace as they still rely on outdated architectures and fragmented supplier systems.
Tesla shares are up over 6 percent at 10:40 a.m. on the East Coast, trading at around $416.
Investor's Corner
Tesla analyst maintains $500 PT, says FSD drives better than humans now
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Tesla (NASDAQ:TSLA) received fresh support from Piper Sandler this week after analysts toured the Fremont Factory and tested the company’s latest Full Self-Driving software. The firm reaffirmed its $500 price target, stating that FSD V14 delivered a notably smooth robotaxi demonstration and may already perform at levels comparable to, if not better than, average human drivers.
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Analysts highlight autonomy progress
During more than 75 minutes of focused discussions, analysts reportedly focused on FSD v14’s updates. Piper Sandler’s team pointed to meaningful strides in perception, object handling, and overall ride smoothness during the robotaxi demo.
The visit also included discussions on updates to Tesla’s in-house chip initiatives, its Optimus program, and the growth of the company’s battery storage business. Analysts noted that Tesla continues refining cost structures and capital expenditure expectations, which are key elements in future margin recovery, as noted in a Yahoo Finance report.
Analyst Alexander Potter noted that “we think FSD is a truly impressive product that is (probably) already better at driving than the average American.” This conclusion was strengthened by what he described as a “flawless robotaxi ride to the hotel.”
-->Street targets diverge on TSLA
While Piper Sandler stands by its $500 target, it is not the highest estimate on the Street. Wedbush, for one, has a $600 per share price target for TSLA stock.
Other institutions have also weighed in on TSLA stock as of late. HSBC reiterated a Reduce rating with a $131 target, citing a gap between earnings fundamentals and the company’s market value. By contrast, TD Cowen maintained a Buy rating and a $509 target, pointing to strong autonomous driving demonstrations in Austin and the pace of software-driven improvements.
Stifel analysts also lifted their price target for Tesla to $508 per share over the company’s ongoing robotaxi and FSD programs.
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