Tesla Faces First Net Cash Outflow in Two Years Amid Heavy AI Spending

Tesla is projected to report its first quarterly net cash outflow in over two years, with Q2 free cash flow expected to be negative $3.3 billion. This financial strain is driven by massive capital expenditures on AI infrastructure and robotics, which are projected to reach $25 billion this year. This shift tests investor patience as CEO Elon Musk pivots Tesla's core focus from electric vehicles to "physical AI" ventures like Robotaxis and the Optimus humanoid robot. The heavy spending threatens short-term profitability and margins, raising questions about when these long-term bets will yield returns. While Tesla's vehicle deliveries showed signs of recovery in Q2, its automotive gross margin (excluding regulatory credits) is expected to fall to 18.1%. Additionally, the rollout of its dedicated "Cybercab" remains slow, and the Robotaxi service is still restricted to only a few cities.