Author: Chris Kirkham and Akash Sriram
LOS ANGELES (Reuters) – Tesla Inc (TSLA) plans to more than double capital spending this year to a record of more than $20 billion, but little of it will go to its traditional business of selling electric cars to human drivers.
The company, which last year lost the global electric car sales crown to China’s BYD, is shifting investment toward unproven business lines such as fully autonomous vehicles and humanoid robots, according to executive comments on an earnings call Wednesday.
Highlighting the change, CEO Elon Musk said Tesla would stop producing the Model X SUV and Model S sedan and instead use space at its California factory to build humanoid robots.
“This is going to be a very big year for capital expenditures,” he said. “We are investing heavily in an epic future.”
Chief Financial Officer Vaibhav Taneja said much of the record investment will go toward the production line for the Cybercab, a fully autonomous vehicle without a steering wheel and pedals, the long-promised Tesla semi-truck, Optimus robots and battery and lithium production plants.
Tesla still relies on human-powered electric vehicles for the majority of its sales, but its valuation far exceeds that of any other automaker, putting it further apart from major tech companies. That value depends largely on investors’ belief that Musk will deliver on lofty promises to deliver robotaxis and humanoid robots backed by the company’s investments in artificial intelligence.
It joins Facebook parent Meta Platforms, Microsoft and Alphabet in planning significant increases in capital spending this year as the companies invest heavily in hardware and data centers to support artificial intelligence model training and customer demand.
Scott Acheychek, chief operating officer of REX Financial, which manages an ETF on Tesla stock, believes Tesla’s car business is no longer the main focus. “The bigger story is that a business model transformation is underway as Tesla focuses on autonomous driving,” he said.
“Necessary expenses”
Andrew Rocco, equity strategist at Zacks Investment Research, said he views the $20 billion as “necessary spending.”
“If Optimus is going to be a best-selling product, the AI has to be trained as well as possible,” he said, adding that the planned spending gave him confidence that Musk’s “sometimes loose timelines will actually be adhered to.”
The $20 billion is more than double last year’s $8.5 billion in capital expenditures and significantly higher than the previous record of $11.3 billion in 2024.
