{"slug": "tesla-profit-disappoints-as-elon-musks-ai-spending-surge-leads-to-cash-burn", "title": "Tesla profit disappoints as Elon Musk’s AI spending surge leads to cash burn", "summary": "Tesla missed analysts' profit forecasts for the second quarter and reported negative free cash flow for the first time in over two years as Elon Musk's AI spending surged. Adjusted profit was 33 cents per share, below the 51-cent estimate, while capital expenditure reached $5.8 billion and free cash flow was negative $1.1 billion. The EV maker's shares fell about 2.5% in extended trading as investors scrutinized its $25 billion AI investment plan.", "body_md": "# Tesla profit disappoints as Elon Musk’s AI spending surge leads to cash burn\n\nBy\n\nReuters\n\nPublished\nJuly 22, 2026, 5:55 p.m. ET\n\nSee more of our coverage in your search results.\n\n[Add The New York Post on Google](https://www.google.com/preferences/source?q=nypost.com)\n\nTesla on Wednesday missed analysts’ profit forecasts for the second quarter and, for the first time in more than two years, reported negative free cash flow as the Elon Musk-led EV maker accelerated [spending on infrastructure for its AI and robotics ambitions](https://nypost.com/2026/04/02/business/elon-musks-tesla-posts-one-of-its-weakest-sales-quarters-in-years-as-slump-continues/).\n\nShares were down about 2.5% in extended trading.\n\nMusk plans to spend more than $25 billion this year, nearly triple last year’s $8.53 billion, as he bets on Tesla’s AI-powered self-driving technology and robotics, over its auto business, which still is the core revenue generator.\n\nBut the pivot is expensive, and while much of Tesla’s valuation hangs on the promise of potentially high-margin revenue streams, the spending is [heightening investor scrutiny](https://nypost.com/2026/04/23/business/teslas-stock-drops-on-elon-musks-25b-ai-bet-why-investors-are-worried/).\n\nThomas Monteiro, senior analyst at Investing.com, said it could become difficult for Tesla to keep up with its recent capital-spending pace as its cash burn worsens.\n\n“Given that most of the Tesla premium rests on future narratives, every capex dollar Tesla commits will be judged more harshly than it was a year ago,” he said.\n\nAdjusted profit in the quarter ended June 30 was 33 cents per share, versus analysts’ average expectation of 51 cents per share, according to data compiled by LSEG.\n\nTesla’s profitability was hurt by higher operating expenses driven by AI, lower average selling prices and weaker regulatory credit revenue even as vehicle deliveries rose, the EV maker said on Wednesday.\n\nCapital expenditure in the quarter came in at $5.8 billion, compared with the expectation of about $6.2 billion.\n\nTesla reported negative free cash flow of $1.1 billion, compared with analysts’ expectation for cash burn of $3.3 billion.\n\nEV sales in the quarter helped assuage some fears for now. [Tesla delivered 480,126 vehicles in the second quarter](https://nypost.com/2026/07/02/business/elon-musks-tesla-shocks-wall-street-with-record-sales-but-shares-still-tumble/), above Wall Street expectations and up from 384,122 vehicles a year earlier.\n\nThe Austin, Texas-based automaker reported revenue of $28.24 billion for the three months ended June 30, compared with analysts’ average estimate of $25.71 billion.\n\nAutomotive gross margin came in at 16.3%, compared with the expectation of 18.04%, according to Visible Alpha data.\n\nTesla also deployed 13.5 GWh of energy storage products in the quarter, up from 8.8 GWh in the first quarter and 9.6 GWh a year earlier.\n\n## Automotive business under pressure\n\nBut the core automotive business remains under scrutiny as competitors introduce newer models, often at lower price points, while the company continues to rely heavily on its Model 3 compact sedans and Model Y SUVs for volume.\n\nTesla has tried to stimulate demand through lower-priced trims, including stripped-down, affordable versions of the Model 3 and Model Y late last year, and the launch this month of a six-seater variant of the Model Y in the United States, where demand has been hit by the removal of key tax credits last year.\n\nWall Street expects Tesla to deliver about 1.7 million vehicles in 2026, according to Visible Alpha data. That would imply growth from last year’s levels, but analysts remain divided over whether the second-quarter rebound reflects sustainable demand or timing effects after a weak first quarter.\n\nAnalysts say sustaining the momentum could be difficult, with third-quarter growth set to face a high bar after a strong performance in the same period last year.\n\nInvestors have increasingly turned their attention to Musk’s push into self-driving technology and robotics, seeking clearer evidence that Tesla’s autonomy narrative is shifting from promise to commercial reality.\n\n## Robotaxi expansion accelerates\n\nTesla’s energy generation and storage unit has emerged as a key counterweight to the auto business, helped by demand for grid-scale batteries that support renewable energy, data centers and electricity-network stability.\n\nTesla has said it expanded its unsupervised robotaxi service in Austin and launched unsupervised rides in Dallas and Houston in April. The company also operates a robotaxi service in Miami and expanded the service to Orlando and Tampa, Florida. Tesla has previously identified Phoenix and Las Vegas among future expansion markets.\n\nThe company received approval in April to deploy its advanced driver assistance software – called Full Self-Driving Supervised – in the Netherlands. Some other European countries have also allowed the technology following the Dutch approval.\n\nA key vote to decide on Europe-wide approval for the technology is expected later this year. Tesla is also pushing for approval in China.\n\nTesla’s shares have fallen more than 15% this year. At about $1.4 trillion, it remains the world’s most valuable automaker by a wide margin, reflecting investor expectations that self-driving software, energy storage, robotaxis and humanoid robots could eventually deliver higher-margin growth than vehicle sales.", "url": "https://wpnews.pro/news/tesla-profit-disappoints-as-elon-musks-ai-spending-surge-leads-to-cash-burn", "canonical_source": "https://nypost.com/2026/07/22/business/tesla-profit-disappoints-as-elon-musks-ai-spending-surge-leads-to-cash-burn/", "published_at": "2026-07-22 21:55:29+00:00", "updated_at": "2026-07-22 21:59:23.175538+00:00", "lang": "en", "topics": ["artificial-intelligence", "autonomous-vehicles", "ai-infrastructure", "ai-products", "ai-startups"], "entities": ["Tesla", "Elon Musk", "Thomas Monteiro", "Investing.com", "LSEG", "Visible Alpha", "Model 3", "Model Y"], "alternates": {"html": "https://wpnews.pro/news/tesla-profit-disappoints-as-elon-musks-ai-spending-surge-leads-to-cash-burn", "markdown": "https://wpnews.pro/news/tesla-profit-disappoints-as-elon-musks-ai-spending-surge-leads-to-cash-burn.md", "text": "https://wpnews.pro/news/tesla-profit-disappoints-as-elon-musks-ai-spending-surge-leads-to-cash-burn.txt", "jsonld": "https://wpnews.pro/news/tesla-profit-disappoints-as-elon-musks-ai-spending-surge-leads-to-cash-burn.jsonld"}}