- Tesla plans about $25 billion in capital expenditures this year while reporting negative $3.3 billion in quarterly free cash flow, showing how heavily AI, Robotaxi, Optimus, and compute investments are weighing on cash.
- The company’s core auto business remains its main revenue base, with about 1.7 million vehicle deliveries over the past year, while UBS lowered its price target to $352 amid concerns over delayed AI returns.
- Tesla’s Robotaxi rollout is progressing more slowly than earlier ambitions, making 2027 a key test year for whether FSD, Cybercab, Semi autonomy, and Optimus can move closer to commercial scale.
Tesla’s plans for self-driving taxis and humanoid robots are progressing more slowly than anticipated, which comes in spite of the company spending staggering funds on artificial intelligence. This has led some investors to ask a question they are used to hearing: when are these AI ventures expected to bear fruit?
The market’s reaction to Tesla’s earnings in the second quarter was characterized by that uncertainty. As Investor’s Business Daily reported, investors reacted with a negative influence on the stock after CEO Elon Musk called upon the investors to be patient regarding the rollout of the robotaxi service and the Optimus robot. This downturn in the stock price was consistent with the general post-earning downturn seen in companies relying on AI technologies, such as Alphabet. Since the important part of the value of Tesla comes from its AI prospects rather than from the sales of products, any delay affects the situation considerably.
A first cash burn in more than two years
Prior to the announcement of its earnings, Reuters claimed that Tesla would suffer its first quarterly cash drain in more than two years as its budget priorities changed, focusing significantly on artificial intelligence infrastructure projects and robotics. It is believed Tesla plans to invest approximately $25 billion in data center and manufacturing in 2026, while estimates made by LSEG stated by Reuters indicate that Tesla will suffer an estimated negative free cash flow of $3.3 billion for the quarter.
Musk has progressively established Tesla as a company focusing on robotics and artificial intelligence and not just electric vehicles. Hence, the company’s future success depends on the successful adoption of autonomous driving and humanoid robots.
Morgan Stanley analysts stated in a note mentioned in a Reuters report that “as capex more than doubles and free cash flow turns negative, investors are increasingly focused on evidence that Tesla’s spending is strengthening its physical AI moat.”
Robotaxis still confined to four cities
The apprehensions among investors are primarily rooted in the differences in Tesla’s future pledges and present achievements.
Elon Musk announced plans to have Tesla’s self-driving cars cover half the U.S. market by 2025 after introducing the Austin robotaxi service in April of last year, Reuters claims. The company even told investors that they would enter seven more cities in the first half of 2026.
Both objectives were not achieved.
Today, Tesla’s robotaxi service operates only in Austin, Dallas, and Houston in Texas, along with Miami. Although production has begun on the purpose-built Cybercab, which has neither a steering wheel nor pedals, those vehicles have yet to enter commercial service. Musk described the production ramp as “agonizingly slow,” according to Reuters.
UBS says commercialization could take longer than investors expect
This prudent view is not new. As reported earlier by Cryptopolitan, UBS has cautioned that Tesla’s robotaxi business and its Optimus humanoid robot could take longer than expected to become profitable companies.
UBS analyst Joseph Spark lowered its forecast for vehicle deliveries by Tesla and questioned whether the rollout of robotaxis would meet expectations in the market, according to a report released in March by Business Insider. UBS retained its Sell recommendation and $352 target, stating that the share price had already dropped by 17% as of then. He writes:
“Recent investor feedback has been that Robotaxi and Optimus updates are slower/more muted than expected”
He stated that the challenges posed by Nvidia’s self-driving services and Waymo’s commercial operations make it exceedingly difficult for Tesla to enjoy a considerable competitive advantage anymore.
The questions retail investors wanted answered
Retail investors expressed similar worries before the earnings call. Reuters stated that the highest-voted question on Tesla’s investors’ relations site asked what had been preventing Tesla from achieving its own short-term objectives. Nine out of the top ten questions posed by shareholders were concerning AI projects such as robotaxis, Optimus, and Full Self-Driving.
However, it was not all doom and gloom during the quarter. According to Reuters, between April and June, Tesla achieved record delivery figures, boosted by rising oil prices that prompted greater sales of electric vehicles in Europe. Analysts anticipate that total deliveries for the year will hit about 1.7 million, which is an increase of 3.9% that will break two years of sales declines.
According to Barclays, a more prosperous automotive sector could facilitate Tesla’s funding for AI ambitions. But for investors, just having successful car sales may not do the trick. They want to see demonstrable proof that Tesla’s expensive AI plan is going to pay off.
| Metric | Latest figure | Why it matters |
|---|---|---|
| Capital expenditure (2026 planned) | ~$25 billion | Reflects Tesla’s aggressive investment in AI, Robotaxi, Optimus and computing infrastructure. |
| Free cash flow (Q2 2026) | -$3.3 billion | Shows AI investment is weighing on near-term cash generation. |
| Vehicle deliveries (2025 baseline) | 1.7 million | Indicates the core automotive business remains the main revenue source while AI businesses scale. |
| UBS price target | $352 | Reflects a more cautious valuation amid commercialization uncertainty. |
Figure 1. Tesla AI investment snapshot (Q2 2026)
Below is a comparison table that clearly separates Tesla’s public ambitions from its reported progress.
| Timeline / Goal | What Tesla previously said | Reported progress (July 2026) | Status |
|---|---|---|---|
| End of 2025 | Robotaxi service could reach about half of the U.S. population. | Tesla shifted to a city-by-city expansion strategy, citing safety and regulatory considerations. (Reuters) | Behind original ambition |
| Mid-2026 | Targeted expansion to seven U.S. metro areas. | Reuters reported service has launched in five metro areas, with availability often limited to selected suburban or geofenced operating zones. (Reuters) | Partially achieved |
| Current footprint | Broad commercial rollout expected as FSD matured. | Robotaxi operations include Austin, Dallas, Houston, Miami, Orlando and Tampa, though service levels and supervision vary by city and expansion has been gradual. (Business Insider) | Continuing rollout |
| Fleet deployment | Earlier projections suggested hundreds of vehicles in major launch markets. | Analysts and investors say deployment remains significantly smaller than earlier expectations, with Tesla declining to provide updated fleet targets. (The Verge) | Below earlier expectations |
| Autonomous mileage | Expected to grow rapidly with expansion. | Tesla reported approximately 2.5 million Robotaxi miles, while Reuters noted Waymo has accumulated roughly 220 million autonomous miles. (Business Insider) | Still trailing established competitor |
| Commercial strategy | Earlier messaging emphasized rapid scaling. | Elon Musk now says Tesla will expand cautiously to validate safety and avoid regulatory setbacks before accelerating deployment. (Investor’s Business Daily) | Strategy shifted |
Figure 2. Promise vs. reported progress (July 2026)
What’s next for Tesla?
Going by Musk’s comments and the fact that Tesla’s Semi factory in Nevada is still scaling up production, next year looks to be the more plausible timeline. Musk stressed that he wants engineers focused on FSD for the Model 3/Y and Cybercab robotaxi for now, noting that Tesla aims to have FSD ready for the Semi right as high-yield manufacturing kicks in.
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FAQs
Why is Tesla expected to report a cash burn?
According to Reuters, Tesla's spending on AI infrastructure and robotics is projected to reach $25 billion this year, outpacing the cash generated by its car and energy businesses and producing negative free cash flow of about $3.3 billion for the quarter.
Where does Tesla's robotaxi service currently operate?
Reuters reported the network is limited to Austin, Dallas, and Houston in Texas, along with Miami in Florida, despite Musk's earlier prediction that it would serve half the U.S. population by the end of 2025.
What did UBS say about Tesla's robotaxi and Optimus plans?
UBS analyst Joseph Spark told clients that robotaxi and Optimus progress has been slower and more muted than investors expected, and said Tesla may not sustainably differentiate on robotaxis given competition from Nvidia and Waymo, per Business Insider.
Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.
Micah Abiodun
Micah Abiodun makes good use of his Environmental Engineering and Management (MSc) at Tallinn University of Technology (TalTech) to polish content and price prediction news at Cryptopolitan. Now on his 7th year in the crypto media space, he covers major cryptos, altcoins, DeFi, stablecoins, macro trends, and emerging tech.
