Tesla’s $25 Billion Spending Spree and a Surprise Cybercab Launch Create a Week of Extremes

Tesla delivered a quarter that checked all the usual boxes — a modest earnings beat, rising deliveries, and a fresh product milestone — yet the stock ended the week nursing losses. The reason lies in a spending plan so aggressive it has analysts questioning when, or if, the payoff will arrive.

The company posted first-quarter adjusted earnings per share of $0.41, edging past the consensus estimate of $0.39. Revenue climbed 16 percent year-on-year to $22.4 billion, while deliveries of roughly 358,000 pure battery electric vehicles allowed Tesla to once again overtake BYD in the global EV race. The net margin, however, contracted sharply to 3.9 percent from 6.4 percent a year earlier, underscoring the cost of the company’s current trajectory.

What overshadowed those numbers was a capital expenditure plan that caught even bullish observers off guard. Tesla now expects to spend $25 billion on capex in 2026 — nearly three times last year’s level and $5 billion more than originally budgeted. Chief Financial Officer Vaibhav Taneja confirmed the company will post negative free cash flow for the remainder of the year, a stark admission that sent the stock sliding.

A Robotaxi Arrives, But the Fleet Remains Tiny

On April 24, Tesla began series production of the Cybercab at its Gigafactory in Texas. The vehicle, which lacks a steering wheel and pedals, rolled off the line in a champagne-gold high-gloss finish — a deliberate departure from the matte prototypes shown previously. It is powered by a 35-kWh battery pack offering a range of roughly 320 kilometers, with a target purchase price below $30,000. For now, the immediate focus is on Tesla’s own robotaxi network rather than retail sales.

The company aims to ramp Cybercab output to several hundred units per week by the end of 2026. Elon Musk has promised an exponential increase in manufacturing toward year-end, though the current scale remains modest. The robotaxi fleet expanded this month to Dallas and Houston, but the numbers are still negligible: in Austin, only four to twelve vehicles are operating entirely without a human safety driver. By comparison, Alphabet’s Waymo subsidiary now completes half a million paid rides per week.

The timeline for broader expansion is also slipping. Tesla removed concrete first-half 2026 targets for five additional U.S. metro areas including Miami and Las Vegas, replacing them with vague references to ongoing preparations. A brighter spot emerged in Europe, where the Netherlands is being used as a blueprint for continent-wide approval of the FSD driver-assistance software, which Tesla hopes to secure in the second quarter.

Should investors sell immediately? Or is it worth buying Tesla?

The Hardware 3 Confession That Triggered Lawsuits

During the earnings call on April 23, Musk made an admission that unsettled millions of Tesla owners. Vehicles equipped with Hardware 3 — installed in cars produced between 2019 and 2023 — have only one-eighth the memory bandwidth of the current Hardware 4 system. According to Musk, that is insufficient for fully unsupervised autonomous driving.

Tesla’s proposed solution involves retrofitting those vehicles with upgraded cameras and computers through so-called micro-factories in major cities. A stripped-down FSD software version for HW3 is expected by the end of June 2026. The acknowledgment has already sparked multiple class-action lawsuits, with plaintiffs pointing to earlier assurances about the hardware’s future-proof capability.

Analysts Split as Wide as Ever

The disconnect between Tesla’s long-term vision and its near-term execution has produced an unusually fractured analyst consensus. Nearly a third of analysts currently recommend selling the stock. Price targets span an extraordinary range, with the most bearish scenario dropping as low as $119 per share. At the other extreme, Dan Ives of Wedbush maintains a $600 target, betting on the eventual monetization of Tesla’s AI initiatives.

The consensus sits at “Hold” with an average price target of $398. Roth Capital stands out on the bullish side with a $505 target, citing the long-term value of the robotaxi network. Barclays analyst Dan Levy, meanwhile, warns that the heavy capital outflows could persist through 2029.

Adding to the near-term pressure, Tesla has built up an inventory of more than 50,000 unsold vehicles. The company closed the week at €320.70 in European trading, down roughly 6 percent over seven days and about 14 percent below its level at the start of the year. The stock remains well off its 52-week high of nearly €417 reached last December.

The next major test arrives in July 2026, when Tesla targets the start of production for the Optimus humanoid robot. For a company spending $25 billion this year alone, that milestone will need to show that the capital is beginning to generate something more than just promises.