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Fitch Ratings has assigned Tesla (TSLA.O) a "BBB" long-term issuer default rating (IDR) for the first time, with a stable outlook. The agency noted that this rating reflects Tesla's strong market position as the global leader in pure electric vehicles, as well as its strategic focus on transitioning into a physical AI company. Fitch expects its pure electric vehicle business to continue maintaining strong profitability, but margins may decline in the coming years as the company rapidly ramps up significant investment in artificial intelligence. These investments will also require a substantial increase in capital expenditure, potentially pushing free cash flow (FCF) negative in the medium term. This heavy investment cycle could increase the company's debt. Fitch expects Tesla's 2026 capital expenditure to exceed $25 billion, more than triple the 2025 level, with research and development spending also set to rise. Most of this spending will be used to support the construction and training of the Cortex 2 AI supercomputer, which is the foundation for Tesla's future FSD, Robotaxi, and Optimus humanoid robot plans.