Tesla runs out of cash due to increased investments in AI and robotaxis

Tesla announced negative free cash flow for the second quarter, marking the first instance in over two years. This downturn is attributed to the electric vehicle maker's intensified investments in artificial intelligence infrastructure, battery capacity, robotaxis, and next-generation production.

The company's stock saw a decline of approximately 3% in after-hours trading. Despite the negative cash flow, Tesla delivered 480,126 vehicles during the second quarter, surpassing Wall Street's forecasts and significantly increasing from the 384,122 vehicles delivered in the same period last year. Production reached 451,758 vehicles, indicating that deliveries exceeded production by over 28,000 units, reversing an earlier inventory build-up.

For the quarter ending June 30, the Austin, Texas-based automaker reported revenues of $28.24 billion, exceeding the average analyst estimate of $25.71 billion. However, adjusted earnings per share stood at $0.33, falling short of the $0.51 expected by analysts.

Tesla's energy storage solutions business showed strong growth, with 13.5 GWh of products installed in the second quarter, up from 8.8 GWh in the first quarter and 9.6 GWh a year prior. This sector has become a significant counterweight to the company's core automotive business, driven by demand for large-scale batteries supporting renewables, data centers, and grid stability. Meanwhile, Tesla's core automotive business faces pressure from competitors introducing lower-priced models, with sales still heavily reliant on the Model 3 and Model Y. The company has responded with more affordable versions and a six-seat Model Y variant in the U.S. to boost demand.