Tesla's AI transition faces financial pressure as capital spending cuts expected

Reuters reported on October 21, 2026, that Tesla's third-quarter capital expenditure reached $4.73 billion, surpassing last year's figures but falling short of analyst expectations of $7.95 billion. The company also reduced its 2026 full-year capital spending target by 20%, from over $25 billion to approximately $20 billion. Despite the cut, Tesla generated $1.53 billion in free cash flow, better than the anticipated negative result. The shift toward AI, robotics, and chip manufacturing is heavily reliant on significant capital investment. While the spending cut improves short-term cash flow, it raises concerns about project delays and reduced innovation capacity. Elon Musk acknowledged ongoing challenges with Optimus, including supply chain and design issues, with solutions expected by late 2027 and deliveries following a year later. As of October 21, Tesla's stock closed at $386.47, with a market cap of $1.53 trillion. The company's third-quarter net profit dropped 43% year-on-year to $787 million.