Tesla Reaffirms Massive Capital Spending In 2026 For Robotaxis And Artificial Intelligence
Complete. Here is the key summaryTesla reaffirmed its plan to invest over $25 billion in capital expenditures by year-end, targeting Robotaxis, AI infrastructure, and Optimus robots. Despite Q2 sales exceeding expectations at $28.2 billion, profits missed estimates due to falling gross margins. CEO Elon Musk prioritized speed over capital efficiency. Consequently, Tesla shares fell more than 16% following the earnings call.
Tesla, Inc. (TSLA -3.42%) told investors on its Wednesday earnings call that it still plans to invest more than $25 billion on capital projects by the end of this year. The statement reaffirms guidance laid out in April, even as its Q2 profits came in well below what Wall Street expected.
Capital expenditures (capex) -- the money a company puts into factories, equipment, and other long-lived assets -- hit $5.8 billion in the quarter alone. That’s 142% more than the $2.4 billion the company spent in the same quarter a year ago.
NASDAQ: TSLA
Key Data Points
As of 10:20 a.m. ET on Friday, Tesla shares have fallen more than 16% since markets closed on Wednesday. The S&P 500 and the Nasdaq Composite were down about 1.3% and 2.8%, respectively, over the same stretch.
Tesla wants to build fast
Chief Financial Officer Vaibhav Taneja confirmed the company is on track to spend $25 billion. More increases are expected over the next two to three years, with the funds earmarked for the company’s Robotaxi fleet, AI computing infrastructure, Optimus manufacturing, and semiconductor fabrication.
CEO Elon Musk framed the strategy as speed over thrift. "We should be spending on capex as fast as we can spend, as fast as we can without it being too wasteful," he said on the call, adding, "it's OK to be a little less capital efficient if we get things done sooner."
Optimus, the company’s humanoid robot, is one of Tesla’s top priorities, with Musk having called it a $10 trillion business in the past. The company pulled its Model S and Model X production lines out of the Fremont plant to clear space for first-generation Optimus robots.
Image Source: Company Image
The first units to roll off the line won’t be headed to customers, however. Rather, "the initial Optimus builds will be used in [its] Optimus Academy for training data collection and further functionality development."
Cybercab, the company’s robotaxi, has already begun production at Tesla’s Gigafactory Texas, and Semi production is expected to ramp this year at a new Nevada plant.
Tesla’s numbers missed the mark
The quarter's top line was strong. Sales topped $28.2 billion, a 26% increase from a year earlier. That was substantially higher than Wall Street had expected, but it was mostly where the good news ended.
Gross margins fell considerably from 17.2% to 16.8%. Analysts expected an increase to 19.4%. Profits slid as well: non-GAAP earnings came in at $0.33 per share versus the expected $0.51.
The bottom line
Tesla is going through a major period of transition, and there are some potentially exciting things happening. The company’s robotaxis are now live in seven cities, the first Optimus robots should be coming off the line by the end of the year, and after some major hits to its sales figures last year in Europe, registrations were up sharply in June across France, Sweden, Italy, and Portugal.
That being said, I’m still a skeptic. Tesla is spending record sums on businesses that don't generate revenue yet and, despite their exciting nature, may never become real businesses. Margins are taking a beating, and the company’s CEO is running two of the largest companies around at the same time.
And even after shares have fallen more than 35% since their highs at the end of last year, they are still trading at incredible multiples.