Tesla bets big on AI with record capital expenditure plan

Tesla is set to sharply increase spending this year as it accelerates its transformation from an electric vehicle manufacturer into an artificial intelligence and robotics company under chief executive Elon Musk, News.Az reports, citing Bloomberg.

The company said capital expenditure in 2026 will exceed $25 billion, roughly three times last year’s level and above its earlier forecast of $20 billion.

“You should expect to see a very significant increase in capital expenditure,” Musk said during a conference call following first-quarter results.

The planned investment will support expanded factory operations, including production of the Optimus humanoid robot, artificial intelligence development, and the Cybercab autonomous vehicle. The shift comes as Tesla’s core automotive business has declined over the past two years, increasing reliance on new growth areas.

Dec Mullarkey of SLC Management said the strategy highlights the high cost of Tesla’s ambitions and is “sobering up the assessment of free cash flow potential.” Tesla shares were little changed in late trading after erasing earlier gains and remain about 21% below their mid-December peak.

Despite the aggressive spending outlook, Tesla reported strong first-quarter earnings, posting adjusted profit of 41 cents per share, beating the 34-cent analyst estimate compiled by Bloomberg, marking a second consecutive earnings beat.

The company attributed performance to “continued growth in demand” in parts of Asia and South America, along with a rebound in North America and the Europe–Middle East region. However, this came after weaker-than-expected vehicle sales earlier in the year, with the first quarter ranking as the second-worst for deliveries since mid-2022.

Andrew Rocco of Zacks said the results suggest the EV business is “stable enough to fund” investments in robotics and autonomy.

Rising fuel prices also supported demand, while chief financial officer Vaibhav Taneja noted slight quarter-on-quarter growth in deliveries from the order backlog. Musk said Tesla is “laying the groundwork” for a significant future increase in vehicle production.

Tesla spent less than $2.5 billion in the first quarter, generating $1.4 billion in positive free cash flow, compared with expectations of a $1.9 billion cash burn.

Energy and storage revenue fell 12% to $2.4 billion, although Tesla expects deployments to rise later this year. The company also reaffirmed plans to expand its Robotaxi service across US cities, though Musk said meaningful revenue is unlikely before next year.

News.Az 

By Nijat Babayev