Tesla cuts 2026 capex forecast to $20B after Q3 beat

Tesla ↗ 3.41% cut its 2026 capital spending forecast by about a fifth after a third quarter in which it spent far less than Wall Street expected and posted surprise positive free cash flow. The company now expects capital expenditures of roughly $20 billion this year, down from its earlier forecast of more than $25 billion, Reuters reported. It did not say which projects would get less money.cnbc.com

Adjusted earnings came in at 48 cents a share, ahead of the 43 cents analysts polled by LSEG expected, on revenue of $28.05 billion, according to CNBC. Revenue was flat from a year earlier. GAAP net income fell 43% to $787 million, or 22 cents a share, as operating expenses rose 39% on spending for AI and Optimus, Electrek reported. The shares rose about 2% in after-hours trading, then reversed and fell about 2% during the earnings call, according to Reuters.uk.finance.yahoo.com+2

Cash flow surprise

Capital spending in the quarter was $4.7 billion, double the year-earlier figure but below the $7.5 billion analysts had forecast. Free cash flow was $1.53 billion, while analysts had expected the company to burn $4.92 billion, Reuters said. On the call, CFO Vaibhav Taneja said Tesla would fund spending "primarily from our cash flows from operations" and had arranged to borrow up to $30 billion, according to a Benzinga transcript. Musk said capex would become "noticeable in the tens of billions in '28," Yahoo Finance reported.uk.finance.yahoo.com+2

"Lower capex suggests less of an 'all-in' approach to the AI arms race than one would expect from Elon," Ryan Lee of Direxion told Reuters.rmb.reuters.com

Demand, margins and Optimus

"Demand is growing rapidly for our vehicles. It's exceeding our production by a significant margin," Musk said. Tesla reported its largest passenger-vehicle backlog in four years, and automotive gross margin excluding regulatory credits came in at 18.1%, above estimates, Reuters reported. Tesla said battery supply was what held back vehicle output. Automotive revenue fell 3% to $20.56 billion and energy revenue fell 16%, CNBC said. Optimus production has begun in Fremont, Bloomberg reported. Musk said he expects the robot's design, reliability and AI problems to be "solved around the end of next year."bloomberg.com+2

SpaceX question looms

The results came a day after Musk said a Tesla-SpaceX merger would be a "good idea" and that both boards had formed special committees, CNBC reported. He noted that a deal would need a 50% vote of all Tesla shares, which he called "quite a high hurdle." On Wednesday's call, he said he had nothing more to add. "Tesla's surprisingly positive cash flow quarter did not come from stronger profits, but from spending billions less than planned," Investing.com analyst Thomas Monteiro told Reuters.cnbc.com+1