S&P Global has reaffirmed its 'BBB' credit rating for Tesla

$Tesla (TSLA.US)$ $BYD COMPANY (01211.HK)$ $NIO Inc (NIO.US)$ $XPeng (XPEV.US)$ According to Saywer Merritt , S&P Global has reaffirmed its 'BBB' credit rating for Tesla. S&P Global make a statement:

"We expect Tesla to maintain an adequate ratings cushion relative to investment-grade peers in 2024 and 2025 amid downward pressure on its historically strong EBITDA margins and cash flows."

My Take: The S&P Global statement is an assurance given to Tesla that based on data and recent evidence, the company's fundamentals remain healthy.

Based on TslaChan, Tesla was incorporated into S&P on October 7, 2022. It was organized into BBB at the time of incorporation, but S&P today confirmed its 'BBB' rating again. Moody’s upgraded Tesla’s credit rating making it ‘investment grade’ (Baa3) on March 2023 - grading holding till now.

I would like to highlight 4 points in the S&P Global note regarding the positive outlook of Tesla:
1. The stable outlook reflects our expectation that Tesla will maintain low debt as it defends its strong market share.
2. Testa, strong liquidity provides it sufficient financial flexibility, though we still expect free operating cash flow (FOCF) to decline over the next two years relative to 2022 and 2023 levels (for a good reason). Per our estimate, Teala's FOCF to sales ratio will likely 3-6% over the next two years, modestly lower than our prior forecasts. We assume capital expenditures will exceed $10 billion in 2024 to around production ramp-ups at its factories and high investments related to autonomous driving and the introduction of the next generation vehicles.
3. Despite this decline. Tesla cash flow adequacy metrics will remain better than most investment-grade automakers through 2025.

4. The company cash balance remains well above our established threshold (roughly 15% of sales) for (two peers that contend with higher industry cyclicality) Ford and GM.