Tesla cuts its 2026 spending forecast to about $20 billion and surprises with positive cash flow

Tesla said on Wednesday, 21 October, that it now expects 2026 capital expenditure of roughly $20 billion, down from its previous forecast of more than $25 billion, Reuters reported. The company did not say where it would spend less.

The numbers

Third-quarter revenue was $28.05 billion, flat year on year and in line with expectations, according to Electrek. GAAP net income fell 43% to $787 million ($0.22 per share), and operating income dropped 56% to $718 million as research and development spending rose 69% to $2.76 billion.

Capex in the quarter was $4.7 billion, double a year earlier but below the $7.5 billion analysts expected (LSEG data). As a result Tesla reported free cash flow of $1.53 billion, while analysts had expected a cash burn of $4.92 billion. The company delivered 486,532 vehicles and said it ended the quarter with its largest passenger-vehicle backlog in four years.

Market reaction

Shares first rose about 2% after hours and then reversed to trade lower. Reuters on Thursday reported Tesla down 3.6% in premarket trading. “Lower capex suggests less of an ‘all-in’ approach to the AI arms race than one would expect from Elon,” said Ryan Lee of Direxion. On the analyst call Musk said he had nothing more to add about a possible merger with SpaceX. Tesla said it aims to produce 5 million vehicles a year by about 2030.