(Bloomberg) -- Tesla Inc. is one step closer to clinching overall blue-chip status after S&P Global Ratings raised the electric-vehicle maker’s credit score to investment grade. 

The Austin, Texas-based company’s rating was upgraded to BBB on Thursday, two steps above junk, from BB+ by S&P, analysts Nishit Madlani and David Binns said in a statement.

“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,” they wrote, referring to a measure of earnings before interest, taxes, depreciation and amortization.

Tesla delivered 343,830 vehicles globally in the third quarter and is slated to report earnings Oct. 19. In recent quarters, it has paid down its debt while remaining the world’s leading maker of electric cars, with four auto plants on three continents. 

“S&P’s upgrade is the latest, but not the last for Tesla,” said Joel Levington, a Bloomberg Intelligence credit analyst. “We see its ratings eventually moving toward high BBB this year.” 

The upgrades are a result of the automaker’s low financial leverage and best in class margins which should continue to stand out among its global peers, he said in an email.

The carmaker now needs just one more upgrade from another major credit grader for its debt to be broadly considered investment grade. Moody’s Investors Service upgraded Tesla to Ba1, one notch below investment grade in January.

“To enhance its competitive position, Tesla will need to expand its range of products to contend with a substantially higher number of models from established global automakers and startups by the end of 2025,” the S&P analysts wrote.

(Adds Bloomberg Intelligence commentary starting in fifth paragraph.)

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