Tesla's spending surged dramatically in the second quarter as Elon Musk committed the company to what he called its "largest and most exciting period of investment," pouring money into AI chip production and robotics rather than its core car business. The sharp rise in capital expenditure pushed Tesla into negative free cash flow, and the company has warned that spending will keep climbing for the rest of the year, underlining how heavily its future now hinges on unproven bets like humanoid robots and self-driving taxis rather than vehicle sales.

Capital expenditure more than doubled from $2.5 billion in the previous quarter to $5.8 billion, leaving Tesla with negative free cash flow of $1.1 billion, an 848 percent year-on-year decline, with full-year spending expected to exceed $25 billion. Much of this is aimed at the "Terafab" chip facility in Austin, which Musk described as a "high-risk, high-payoff bet" needed to secure enough AI chips for the Optimus robot programme. Vehicle deliveries rose 25 percent year-on-year to 480,126 and automotive revenue topped $20 billion, but operating margin slipped to 1.4 percent from 4.1 percent. Musk also addressed regulatory scrutiny of the Robotaxi rollout and sidestepped questions about merging Tesla with SpaceX, whose shares have fallen well below their IPO price; Tesla's own shares dropped in after-hours trading.