Key Takeaways

  • Tesla executives said on the second-quarter earnings call that they expect capital expenditures to exceed $25 billion for the full fiscal year 2026, as the company continues to ramp up expansion in areas such as its Robotaxi service and artificial intelligence.
  • "Capital expenditures will grow over the next two to three years as we expand the Robotaxi fleet, scale up Optimus production capacity, invest in semiconductor factories, install solar manufacturing capacity, and AI compute infrastructure, in addition to other manufacturing expansions," Chief Financial Officer Vaibhav Taneja said Wednesday, according to the transcript. Related statements can be found in thetranscript。
  • CEO Elon Musk added on the call that the company expects 2026 to be a "year of massive capital expenditure." "I'm confident that all the projects we're investing in will yield incredible returns."

Deeper Dive

According to the shareholder report for the quarter ended June 30, Tesla's capital expenditures surged 142% year-over-year to nearly $6 billion. Taneja said the surge in capital expenditures was a primary reason the company posted negative free cash flow for the quarter—the report showed free cash flow plunged 848% year-over-year to approximately negative $1 billion.

Beyond investing in key areas, Taneja said Tesla is also taking an "opportunistic" approach to securing specific debt financing, with a target borrowing capacity of up to $30 billion.

"We believe this is the right strategy to position the company for the next era." He also noted that Tesla's progress toward these goals would be "non-linear," but "the path to remarkable abundance is challenging and requires bold bets."

Despite executives touting more spending plans and pointing to growth in vehicle deliveries and orders—Taneja mentioned the company ended the quarter with its largest order backlog since 2023—concerns over whether the company can meet its targets and weak profits led Tesla's shares to fall about 14% on Thursday following the earnings release.

The report showed Tesla's GAAP net income for the quarter ended June 30 was $1.1 billion, down 5% from the same period last year. Meanwhile, when detailing plans to continue expanding the Robotaxi fleet, Musk was more cautious in describing such efforts than in previous quarters, emphasizing that Tesla is putting safety first.

"We don't want to harm anyone. We are scaling Robotaxi as fast as humanly possible, but at the same time trying to ensure we don't harm anyone, and ideally don't even run over any pets," Musk said Wednesday. Taneja said Wednesday that the company has expanded its Robotaxi service to seven U.S. markets and has begun test drives of its "Cybercab" product.

Since its initial launch last June, the company's Robotaxi fleet and its autonomous driving efforts have faced challenges, including slower-than-expected expansion into new markets, as well as lawsuits from shareholders, regulators, and consumers.

In August of last year, Tesla, Musk, Taneja, and the company's former CFO Zachary Kirkhorn were named as defendants in an ongoing class-action lawsuit in a Texas court, which, as CFO Dive reported at the time, alleged that these executives misled shareholders by underestimating the risks of its Robotaxi product. Additionally, as CFO Dive previously reported, in August 2025, a Florida jury ruled that Tesla must pay $240 million in damages to victims of accidents related to its autonomous driving technology.

The electric vehicle maker has also clashed with regulators such as the California Department of Motor Vehicles, which reportedly determined in 2025 that Tesla's use of terms like "Autopilot" and "Full Self-Driving" was misleading.

In another sign of growth, Tesla executives on Wednesday pointed to the positive impact of Tesla's association with SpaceX, another entity owned by Musk. SpaceX went public in June, becoming the largest initial public offering in history with a valuation of nearly $2 trillion. Related coverage can be foundhere。

Taneja said Tesla's stake in SpaceX contributed a $1 billion mark-to-market gain to net income for the quarter.

On the call, Musk continued to be evasive about rumors of a potential merger between the two entities.

"As you can see from the many collaborations with SpaceX in many areas, the overlap is increasing, especially with Terafab, which will be a massive project," he said in response to an analyst's question. "Obviously, we can't talk about things like merging companies on an earnings call. That would have to go through the proper process."