Tesla misses profit forecasts and posts free cash flow burn as AI and robotics capex surges

Tesla missed analysts' second-quarter profit forecasts and, for the first time in more than two years, reported negative free cash flow as it accelerated spending on infrastructure for AI and robotics ambitions, Reuters reported. Shares were down about 4.5% in extended trading. Adjusted profit was 33 cents per share versus analysts' average expectation of 51 cents, according to LSEG data cited by Reuters. Revenue was $28.24 billion, above the $25.71 billion average estimate. The company delivered 480,126 vehicles in the quarter, above Wall Street expectations and up from 384,122 a year earlier. Automotive gross margin was 16.3%, compared with 18.04% expected, according to Visible Alpha data cited by Reuters. Capital expenditures were $5.8 billion in the quarter, more than double the year-ago quarter and the first quarter of this year, pushing free cash flow to negative $1.1 billion. Analysts had expected a cash burn of $3.3 billion. Elon Musk plans to spend more than $25 billion this year, nearly triple last year, betting on AI-powered self-driving technology, robotaxis and humanoid robots while the auto business remains the core revenue generator, Reuters reported. Musk told analysts on a post-earnings call that it is a massive capex year and that he is confident the investments will yield returns. Profitability was hurt by higher AI-driven operating expenses, lower average selling prices and weaker regulatory credit revenue even as deliveries rose. Average revenue per vehicle sold fell to $42,730 from $45,345 after Tesla ended more expensive Model S and Model X production and used incentives. Energy storage deployments rose to 13.5 GWh from 9.6 GWh a year earlier. Tesla said it expanded unsupervised robotaxi service in Austin and launched unsupervised rides in Dallas and Houston in April, and operates robotaxi service in Miami with expansion to Orlando and Tampa.