By Chris Kirkham and Akash Sriram
LOS ANGELES, Jan 28 (Reuters) – Tesla plans to more than double capital spending to a record high of more than $20 billion this year – but some of it will go to its traditional business of selling electric vehicles to human drivers.
The company, which lost the global EV sales crown to China’s BYD last year, is instead shifting investment to unproven business lines such as fully autonomous vehicles and humanoid robots, based on executive comments on Wednesday’s earnings call.
Underscoring the change, CEO Elon Musk said Tesla will end production of its Model X SUV and Model S sedans and instead use space at its California factory to make humanoid robots.
“This is going to be a very big capex year,” he said. “We are making big investments for an epic future.”
Much of the record investment will be spent on production lines for the Cybercab, a fully autonomous vehicle without a steering wheel and pedals, the long-promised Tesla semi-truck, Optimus robots and plants for battery and lithium production, said Chief Financial Officer Vaibhav Taneja.
Tesla still relies on human-driven EVs for most of its sales, but its valuation far outstrips any other automaker, putting it more in line with the major tech companies. Much of that value depends on investors’ belief that Musk will deliver on lofty promises to deliver robotaxis and humanoid robots backed by the company’s investment in artificial intelligence.
It joins Facebook, Microsoft and Alphabet’s Meta Platforms in planning big increases in capital spending this year, as those companies invest heavily in hardware and data centers to support AI model training and customer demand.
Scott Acheychek, chief operating officer of REX Financial, which manages ETFs with exposure to Tesla stock, argued that Tesla’s car business was no longer the main focus. “The biggest story,” he said, “is the business model transition now underway” as Tesla focuses on autonomous driving.
‘NECESSARY EXPENDITURE’
Andrew Rocco, a stock strategist at Zacks Investment Research, said he views the $20 billion as “necessary spending.”
“If Optimus is going to be a best-selling product, the AI has to be trained as well as possible,” he said, adding that the planned spending gives him confidence that Musk’s “sometimes loose” timelines will actually be honored.
The $20 billion is more than double the $8.5 billion in capital spending last year, and significantly higher than the previous record of $11.3 billion in 2024.