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Elon Musk has been straining for some time against the idea that Tesla should be seen as a carmaker. Rather, as the first all-purpose robotics company, its future lies in equipping and running a global fleet of driverless taxis and in selling humanoid robots.
The full financial implications of that attempted pivot are starting to come into focus. This week, Tesla signalled a lurch back into what is expected to be negative free cashflow territory as it gears up for the long-awaited dawn of the robots. A decade after its heavy spending on electric vehicle development led to bankruptcy worries, Musk is once again getting ready to burn through mountains of cash in pursuit of a big dream.
Tesla’s latest earnings report, released on Wednesday, underlined how untethered it has become from the financial strictures it once observed as an automobile company. Musk once talked confidently about growing vehicle sales by 50 per cent a year and boasted of his company’s ability to maintain profit margins well in excess of much of the auto industry.
As competition has mounted and the US ended its electric vehicle subsidies, those targets have gone by the board. Tesla’s vehicle deliveries in 2025 were nearly 10 per cent lower than the record hit two years before, while automotive revenue was 15 per cent lower. In the same period, the company’s operating margin halved, to 4.6 per cent. Musk’s response: To urge Tesla investors to look past its car business and focus instead on its grand future in robotics.
Nor, it seems, is it worth worrying too much about the profitability of future car sales. Asked this week about the gross margin the company expects on the new driverless taxis it plans to soon put into production, Tesla’s finance chief implied that was the wrong question. It is shifting to a different business model, he suggested, as it starts to charge an annual subscription for its Full Driving Software and looks to pick up a slice of Robotaxi fares.
The clearest sign that Musk is impatient to break free of his company’s carmaker roots, meanwhile, is an opening of the investment floodgates. Capital spending will jump from $8.5bn to more than $20bn this year, nearly double what analysts had been expecting. While Tesla has $36bn of cash on hand, net of debt, it has signalled it might raise more funds for the investment programme through “debt or other means”.
Behind this massive increase lies not only the investment needed for driverless taxis, but preparations to build Optimus robots. There is also a big outlay for the computing power to train the AI models required for Optimus. And this doesn’t even take into account the solar plants and chipmaking fabs that Musk believes Tesla will eventually need to build to meet its future targets.
This is only one part of what is quickly turning into a significant recapitalisation of the wider Muskverse. If raising and deploying humongous amounts of cash has become the hallmark of true tech ambition, then Musk is not about to be left behind.
Earlier this month, xAI completed a $20bn round of funding. And the FT reported this week that SpaceX is looking to raise $50bn as early as June in what would be by far the biggest IPO ever staged.
It is tempting to see these various parts of the Muskverse fitting together more tightly as tech’s best-known visionary gathers his resources for an assault on the next giant space — robotics and AI markets. Tesla said this week, for instance, that it is investing $2bn in xAI, a move that Musk claimed would enable it to use that company’s Grok AI model to help manage Tesla’s fleet of Robotaxis. SpaceX, meanwhile, plans to use some of its IPO cash to put data centres into orbit, potentially giving xAI a leg-up in its race against OpenAI and Google.
Artificial intelligence looks like the common thread tying all of this together. But Tesla may have less to gain from this supposed industrial synergy than Musk suggests. The AI models needed for its robotics ambitions, and the supercomputer it is building to develop them, have little in common with xAI’s large language models.
Instead, Tesla will have to master the full stack of technologies needed to be a robotics powerhouse on its own. As Musk warned this week, that has put it squarely up against a group of Chinese EV and robotics companies that have shown themselves to be world leaders in manufacturing and are also starting to record impressive results in AI.
Timing is now all. Years after its CEO first said the company was on the brink of autonomous driving, Tesla claimed to have carried out its first fully driverless taxi rides in Austin this month. It needs to move fast to show it can turn this into a real business. Only then will it become clear whether robotics is more than an Elon Musk fever-dream.
richard.waters@ft.com
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