Tesla plans to more than double capital spending to a record high of more than $20bn (R313,126,498,000) this year, but little of it will go to its traditional business of selling electric vehicles to human drivers. The company, which last year lost its global EV sales crown to China’s BYD, is instead shifting investment to yet-unproven business lines such as fully autonomous vehicles and humanoid robots, based on executive comments on Wednesday’s earnings call. Highlighting the change, CEO Elon Musk said Tesla would end production of its Model X SUV and Model S sedans and instead use the space in its California factory to make humanoid robots.
“This is going to be a very big capex year,” he said. “We’re making big investments for an epic future.” Most of the record investment will be spent on production lines for the Cybercab, a fully autonomous vehicle without a steering wheel and pedals, the long-promised Tesla semi-truck, Optimus robots and plants for battery and lithium production, CFO Vaibhav Taneja said. Tesla is reliant on human-driven EVs for most of its sales, but its valuation far exceeds any other carmaker, putting it more in league with major tech companies.
Much of that value hangs on investors’ beliefs that Musk will deliver on lofty promises of delivering robotaxis and humanoid robots backed by the company’s investment in artificial intelligence. It joins Facebook-parent Meta Platforms, Microsoft and Alphabet in planning sharp increases in capital spending this year as those companies invest heavily in hardware and data centres to support AI model training and customer demand. Scott Acheychek, COO of REX Financial, which manages ETFs with exposure to Tesla stock, argued Tesla’s car business was no longer the main focus.
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“The bigger story,” he said, “is the business model transition underway” as Tesla focuses on autonomous driving. Andrew Rocco, stock strategist at Zacks Investment Research, said he viewed the $20bn as “necessary spending.” “If Optimus is going to be a best-selling product, the AI must be trained as well as possible,” he said, adding the planned spending gives him confidence Musk’s “sometimes loose timelines will actually be honoured”, The $20bn is more than double the $8.5bn (R133,151,224,150) in capital spending last year, and significantly above the prior record of $11.3bn (R177,012,803,870) in 2024. Taneja said on the call Tesla has more than $44bn (R689,090,600,000) in cash and investments on the books it can use to fund the investments. He signaled this year was not likely to be the end of increased spending, adding the company could look to pay for the investments “through more debt or other means”.
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