Tesla shares fell more than 3% in after-hours trading on Wednesday, reversing an initial gain of about 2% following its third-quarter earnings announcement, as investors assessed lower capital expenditure guidance and a measured timeline for scaling its Optimus humanoid robot.
The electric vehicle maker reported positive free cash flow for the quarter, beating expectations, but its decision to reduce planned investment raised questions about the pace of spending on artificial intelligence, robotaxis and robotics, which underpin its longer-term growth strategy.
Tesla cut its full-year capital expenditure guidance to approximately $20 billion from a previous estimate of more than $25 billion.
“We are revising our CapEx guidance to be approximately $20 billion for the current year as a result of managing our capital deployment efficiently and plan to fund it primarily from our cash flows from operations. Additionally, during the quarter, we secured capacity to borrow up to $30 billion to support the expected growth in CapEx,” CFO Vaibhav Taneja said during the earnings call.
The reduction could help preserve Tesla’s financial flexibility as it prepares for an ambitious expansion.
However, lower spending could also raise concerns that the company is moving more cautiously than investors expected in areas considered central to its future growth.
FCF beats expectations, but lower capex raises questions
Tesla spent $4.7 billion on capital expenditure in the third quarter ended September 30, double the amount recorded a year earlier but below the $7.5 billion expected by analysts on average, according to LSEG data.
The company reported free cash flow of $1.53 billion, compared with analysts’ expectations of a $4.92 billion cash burn.
“The free cash flow beat was a pleasant surprise, but when combined with the lower-than-expected capex, raises questions on the next step for the automaker,” said Ryan Lee, senior vice president of product and strategy at Direxion, which offers ETFs tied to Tesla, in a Reuters report.
“Lower capex suggests less of an ‘all-in’ approach to the AI arms race than one would expect from Elon.”
CEO Elon Musk had previously described 2026 as “a massive capex year” and expressed confidence that the investments would generate “the best capex returns that we’ve ever seen.”
Taneja said spending would continue to expand over the next few years as Tesla scales its Robotaxi fleet, increases Optimus production, installs solar manufacturing capacity, purchases additional superintelligence computing infrastructure and builds a semiconductor fabrication facility.
Tesla’s revenue came in at $28.05 billion for the quarter, slightly above the average analyst estimate of $27.88 billion, according to LSEG data.
Revenue was $28.10 billion in the same period a year earlier.
Adjusted earnings per share reached 48 cents, beating analysts’ expectations of 43 cents.
Optimus production ramp-up remains gradual
Tesla’s plans for its Optimus humanoid robot also remained a focus during the earnings call, with Musk cautioning investors that scaling production would take time despite early progress.
“We’ve started what I’d call early production on our high-volume line in Fremont. I want to elaborate on this point because I have said this before, that the growth of Optimus, it’s an S curve, but the initial part of the S curve has a shallow slope and is somewhat bumpy because it is such a radically new product,” he said.
“I would expect that it takes us probably at least a year, maybe a little longer, to get to that annualized rate, to get to 20,000 units a week,” he added.
“Optimus is a very big deal. I do want to temper expectations that we still have a lot to get through, and it’s about a year or so that it’ll take us to get through all that stuff,” he said.
The comments underscored the execution challenges involved in turning Tesla’s robotics ambitions into a large-scale business, even as investors look for new growth engines beyond electric vehicles.
SpaceX merger remains uncertain
Tesla also declined to provide further details about a potential merger with SpaceX, another issue drawing investor attention as the two companies expand their collaboration.
“We will not be addressing any questions today on a potential merger with SpaceX,” Travis Axelrod, Tesla’s head of investor relations, said as he opened the company’s third-quarter earnings call to analysts’ questions on Wednesday.
Some Wall Street investors view a combination as increasingly likely, but Musk told SpaceX investors on Tuesday that discussions between the boards of the two companies remained at an early stage and that a merger was not certain.
The companies have grown closer through projects including Terafab, their planned chip-making initiative, adding to speculation about a broader combination.
“In our view, investor sentiment surrounding the story has shifted, moving from concerns about the cash burn associated with the major capex cycle it appears to be entering, to questions surrounding the potential merger with SpaceX,” CFRA analyst Garrett Nelson wrote in a note to clients.
Nelson views a merger as nearly certain and expects it could happen by the end of 2027.
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