S&P Global Ratings has formally raised Tesla's long-term credit rating to investment grade. Tesla was nevertheless classed as a junk bond by rating agencies like S&P Global Ratings and Moody's Investors Service despite generating profits for more than two years in a row and accruing over $18 billion in cash while carrying very little debt.
Tesla now has its first investment grade rating from S&P Global Ratings, which lifted the automaker's long-term credit rating from BB+ to BBB. Tesla was mentioned by the rating agency in its justification for the upgrading as follows:
We now view Tesla’s credit profile more favorably because it continues to demonstrate market leadership in electric vehicles (EVs), with solid manufacturing efficiency that supports strong EBITDA margins and sustained positive free operating cash flow (FOCF), above our previously established upside triggers.
Tesla has beaten S&P Global Ratings' estimates on a number of indicators, the company acknowledged. The business is confident that Tesla will continue to generate significant profits while maintaining minimal debt. The stable view reflects our expectation that Tesla will keep its debt levels low while maintaining its strong market share, profitability, and good liquidity despite a faltering economy and an environment that is becoming more competitive for EVs.
While the ordinary investor and Tesla stockholders may not find this upgrading to be significant, some huge funds that frequently have a policy not to participate in firms that have anything less than an investment grade rating, also known as "blue chips," may find it to be. Due to this, some sizable funds have been hesitant to invest in Tesla.
Tesla Transitions to Cameras
Tesla will begin replacing the ultrasonic sensors in its electric cars but admits that the cameras in their stead aren't yet ready for the market. This week, Tesla stated that it would stop employing ultrasonic sensors in its cars. In the future, all functions relating to a car's safety and driver-assistance capabilities are anticipated to be handled by the company's suite of cameras, known as Tesla Vision.
Nevertheless, according to Tesla, key fundamental functions, including Park Assist, Autopark, Summon, and Smart Summon, won't be initially available on vehicles shipped without ultrasonic sensors but rather will do so with a software update.
The changeover will start with the mid-size Model 3 and Model Y in the coming months, followed by the larger Model S and Model X in 2023. The 12 ultrasonic sensors Tesla vehicles now have, which are believed to be mostly utilized for parking assistance, will be replaced by a 360-degree array of cameras.
According to Tesla, you can check your car for the tiny circles on the front and rear bumpers to see if it has the sensors.
Some Autopilot functionalities were consequently restricted in vehicles lacking radar as a result of this change. For instance, until May of this year, Tesla restricted the Autosteer speed of Tesla Vision vehicles to just 75 mph. Now, Tesla is declaring that it will remove ultrasonic sensors and replace them with its Tesla Vision technology, taking things a step further. The most common uses of ultrasonic sensors were for short-range object detections in auto-park and collision warning systems.
Along with the removal of USS, we have simultaneously launched our vision-based occupancy network – currently used in Full Self-Driving (FSD) Beta – to replace the inputs generated by USS. With today’s software, this approach gives Autopilot high-definition spatial positioning, longer range visibility and ability to identify and differentiate between objects. As with many Tesla features, our occupancy network will continue to improve rapidly over time.
Tesla acknowledged that adopting a camera-only strategy will once more lead to some feature limitations. These functionalities will soon be reinstated through a succession of over-the-air software updates once they reach performance parity with today's vehicles.
Similar tactics were used by the US automaker when it started gradually removing radars from its electric vehicles sold in the US. The semi-autonomous "Autopilot" system also relies on Tesla Vision cameras.