When Instructors grade report cards they have 4 options by default to choose from:
Awesome Job!, Good, but not great!, Needs work, keep practice! and Not Covered.
To change these options go to the Report Card settings page.
From there, fill out the "Add Grade Option" form and hit the green "Add to Report Card" submit button:
Now when Instructors grade driving lessons they will have the option of "A1" in the select menu as a grade option. Continue to add more in order for them to have more options.