Tesla swung to -$1.1B free cash flow as capex hit $5.8B, its first shortfall since 2024. Musk said spending will accelerate, with total capex expected to top $25B this year.
Tesla's second-quarter capital expenditure jumped 142% year over year to $5.8 billion, driving a negative free cash flow of $1.1 billion – its first shortfall since 2024. Shares fell in premarket trading after the company's profit missed analysts' expectations.
Elon Musk told investors on the post-earnings call that he has asked executives to keep accelerating the spending pace. "We should be spending on capex as fast as we can spend – as fast as we can without it being too wasteful. So we're not trying to aim for some extremely high-efficiency capital spend because that would slow things down," Musk said.
The EV maker is investing heavily in new production lines and factories for its Cybercab robotaxi and Optimus humanoid robot. Chief Financial Officer Vaibhav Taneja said on the call that Tesla aims to secure debt facilities that would give it the capacity to borrow up to $30 billion. He predicted spending would ramp up over the next two to three years as the company builds a solar panel factory, installs more AI compute, and breaks ground on a "Terafab" semiconductor facility it is developing with SpaceX.
Tesla's total capex is expected to surpass $25 billion this year, executives told investors. The company recorded a negative free cash flow of $1.1 billion in the second quarter.
The spending push comes as other tech giants burn cash to keep pace in the AI race. Google this week reported a negative free cash flow of nearly $6 billion in its second-quarter earnings and raised its full-year capex forecast to as much as $205 billion.
Musk described Tesla's capital efficiency as "off-scale good" because the company is investing in productive assets like factories and infrastructure simultaneously. "I think probably this is the fastest industrial scale-up since World War II in America," he said.
Musk's comments on Tesla's spending efficiency come a year after he launched an assault on wasteful government spending with DOGE, and he has continued to criticize government spending as prone to abuse. On Wednesday he told investors the company's approach was different because it was putting money into long-lived assets.
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