Tesla to spend over $25 billion in AI and robotics push

Tesla is set to sharply increase spending this year as it pushes to transform from an electric vehicle maker into an artificial intelligence and robotics company under chief executive Elon Musk, as per Bloomberg.

The company said capital expenditure in 2026 will exceed $25 billion, roughly triple last year’s level and above its earlier $20 billion forecast. “You should expect to see a very significant increase in capital expenditure,” Musk said during a conference call after first-quarter results.

The investment will fund expanded factory operations, including production of the Optimus humanoid robot, AI development, and the Cybercab autonomous vehicle. The shift comes as Tesla’s core automotive business has declined for the past two years, increasing reliance on new initiatives.

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

Tesla still reported strong first-quarter earnings, with adjusted profit of 41 cents per share, beating the 34-cent analyst estimate compiled by Bloomberg, marking a second consecutive upside surprise. The company cited “continued growth in demand” in parts of Asia and South America, alongside a rebound in North America and the Europe-Middle East region.

This followed weaker-than-expected vehicle sales earlier in the year, with the first quarter the second-worst for deliveries since mid-2022. Andrew Rocco of Zacks said the report shows the EV business is “stable enough to fund” investments in robotics and autonomy.

Rising fuel prices have 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, contributing to $1.4 billion in positive free cash flow, versus expectations of a $1.9 billion burn.

Energy and storage revenue fell 12 per cent to $2.4 billion, though Tesla expects deployments to rise this year. It also reaffirmed Robotaxi expansion plans across US cities, though Musk said meaningful revenue is unlikely before next year.

By Tamilla Hasanova