Tesla Cuts 2026 Spending Forecast to About $20 Billion and Shares Slip

Tesla shares fell on October 22 after the EV maker cut its capital spending forecast, raising concerns among investors counting on heavy investment for Elon Musk's AI and robotics vision, Reuters reported. The company on October 21 lowered its 2026 capital spending forecast to about $20 billion from more than $25 billion, after spending far less than expected on AI and robotics in the third quarter — a shortfall that produced a surprise positive free cash flow.

The tension is the classic one for Tesla. Investors welcome a larger budget if they can see returns, but a smaller one hints at slowing growth, said Josh Gilbert, lead analyst at eToro. "For a stock priced on Cybercab and Optimus, that (capex forecast cut) explains why the shares went nowhere on a result that beat on most measures." Tesla did not break down which areas would see spending cuts, with leadership attributing the adjustment to managing capital deployment efficiently. The strong cash position may prove valuable as Musk explores combining Tesla with the far more capital-intensive SpaceX, where special committees at both companies are now studying a potential merger.

The market context is unforgiving. Tesla shares have declined about 14% this year, against a roughly 15% gain for the Nasdaq, and sit about 23% below the record intraday high of $498.83 reached in December. Yet the valuation remains far above peers: Tesla traded at 188.24 times forward earnings estimates, compared with 6.58 for Ford and 5.16 for General Motors. One caution from analysts: Tesla may now enter a period of limbo while investors await news on a potential SpaceX combination, which could face significant regulatory hurdles.