Tesla trims capex as Optimus ramp slows

Tesla (TSLA) shares fell roughly 3.3% in after-hours trading following its Q3 2026 earnings release, as investors weighed solid near-term results against uncertainty around long-term investment plans. The company reported earnings per share of $0.48 on revenue of $28.05 billion, beating the $0.4488 earnings consensus but narrowly missing revenue expectations and posting a 0.2% year-over-year revenue decline.

Despite a profit beat, the market reaction turned negative as attention shifted from resilient automotive performance to the cost and timing of Tesla’s next phase of growth in AI and robotics. Automotive gross margin excluding credits improved to 18.1%, and free cash flow reached $1.53 billion, but questions remained about how aggressively Tesla will fund new initiatives.

Tesla revised its 2026 capital expenditure guidance to approximately $20 billion, down from more than $25 billion. Management described this as efficient capital deployment and said the plan is to fund capex primarily from operating cash flow, while also securing capacity to borrow up to $30 billion to support expected growth in spending.

CFO Vaibhav Taneja indicated that capital expenditures will continue to expand in future years for robotaxis, Optimus, solar manufacturing capacity, additional computing infrastructure, and a semiconductor fab. Elon Musk added that capex is currently a little lower than anticipated but is expected to become more meaningful next year and reach noticeable levels in the tens of billions in 2028.

Taneja also highlighted that commodity price increases and interest rate changes continue to add to costs and create headwinds for automotive margins, even as vehicle deliveries in the quarter were constrained primarily by production as factories work toward maximum utilization.

Elon Musk said Tesla has started early production of its Optimus humanoid robot on a high-volume line at the Fremont factory. The line, designed for a planned capacity of 1 million units per year, is launching production with the Optimus Gen 3 design, while an even larger line is planned for Giga Texas.

Musk cautioned that the initial Optimus ramp will follow an S-curve with a shallow and somewhat bumpy early slope because the product is radically new and the design is still evolving. He said it could take at least a year to reach a production rate of roughly 20,000 robots per week, reflecting ongoing changes to design, durability, and robot hands.

Tesla does not expect to deliver Optimus units to external customers until around the end of next year, with early deployments likely focused on industrial uses such as dangerous, repetitive tasks that require round-the-clock operation. Executives cited remaining work on AI, electromechanical design, reliability, and especially hand design before broader commercialization.

Musk reiterated his conviction that Optimus and humanoid robots in general will be the biggest product on Earth, while also noting the need to temper expectations given the amount of work still ahead. Tesla plans to integrate its AI 5 chip into Optimus around April next year, targeting an order-of-magnitude increase in compute and capabilities compared with the prior chip generation.

Beyond robotics, Tesla emphasized that demand and production for its existing businesses remain strong, with vehicle demand significantly exceeding production and more than 480,000 deliveries for a second consecutive quarter. Energy deployments reached 13.7 GWh with a 33.1% gross margin, and nearly all Megapack capacity for 2027 is already sold, even as operating expenses continue to rise due to research and development for Optimus, Megapack 3, and the Semi truck.