Tesla trims AI and robotics spending, boosting cash ahead of possible SpaceX merger

Tesla reported stronger-than-expected free cash flow in the third quarter after spending far less on AI and robotics than Wall Street anticipated, and it cut its 2026 capital expenditure forecast to roughly $20 billion from over $25 billion. The move bolsters its finances ahead of a potential merger with SpaceX, though it may slow progress on key growth initiatives. Tesla spent $4.7 billion on capital expenses in the quarter, below the $7.5 billion analysts expected, while free cash flow hit $1.53 billion against a projected $4.92 billion burn. CEO Elon Musk has called a Tesla-SpaceX merger a "good idea," with committees formed to discuss it, but investors worry reduced investment could undermine robotaxi and humanoid robot plans. Revenue was flat year-over-year but beat targets, with net income down 43 percent and deliveries up for the first time in three years. Automotive gross margin reached 18.1 percent, and Tesla aims to produce 5 million vehicles annually by 2030, up from an expected 2.5 million this year.