Tesla just announced it's cranking up its spending plans for 2026. During its Q1 earnings call, the company said it's raising its capital expenditure forecast from a previous estimate of $20 billion to over $25 billion—a roughly 25% jump. For context, its total capital spending for 2025 is projected to be just $9 billion.
CEO Elon Musk called the massive increase "completely reasonable," saying the goal is to build "significantly growing future revenue streams" from AI, robotics, and its own chips. CFO Vaibhav Taneja said the company is entering a "large-scale capital investment phase that will last for years," and expects free cash flow to be negative for the rest of 2026.
Q1 results were better than expected. Free cash flow came in at $1.44 billion, while analysts had predicted the company would burn through $1.43 billion. Revenue was $22.39 billion, slightly below the expected $22.6 billion. Deliveries grew 6.3% year-over-year. The stock initially popped 4% after the earnings release, but fell back during the call and closed down 2.4%.
On the autonomous driving front, the steering-wheel-and-pedal-free Cybercab starts production this year, though Musk said initial output will be slow before ramping up toward the end of the year. The Model Y robotaxi service is already live in Dallas and Houston, with plans to expand to five more cities in Arizona, Florida, and Nevada. Musk expects the service to reach about 12 states by year-end. Meanwhile, the Dutch vehicle authority RDW has submitted an application to the European Commission for a Europe-wide certification of Tesla's Full Self-Driving (FSD) system.