Tesla has lowered its capital spending forecast for 2026. In its Q3 ’10 report, the company now says it expects capital expenditures to “exceed $20 billion in 2026,” down from the “more than $25 billion” it had forecast since April.
The change was in the 10-Q that Tesla filed on Wednesday, not in the letter to shareholders it published the same day. And it lands in a quarter in which Tesla reported $1.53 billion of positive free cash flow, a figure largely dependent on timing.
Tesla’s 2026 capex guidance continues to move forward
Tesla entered 2026 with about $20 billion in capital expenditures. In April, it raised that figure to more than $25 billion, and in July, CFO Vaibhav Taneja reiterated the figure, while Elon Musk called 2026 a “year of massive capital spending.”
Now it is back to “more than $20 billion.”
Tesla has spent $13.01 billion so far this year: $2.49 billion in the first quarter, $5.79 billion in the second quarter, and $4.73 billion in the third quarter. Reaching $25 billion would have required about $12 billion in the fourth quarter alone, more than double its biggest quarter. The new floor only requires about 7 billion dollars.
The 10-Q says the 2026 spending is “driven by our SI initiatives, including investments in IT infrastructure and data centers,” along with factory ramps and Tesla’s fleet of “company-operated SI-enabled assets.”
However, there is a problem with the cash figures. Tesla had $3.67 billion in equipment and construction expenses in its liabilities at the end of September, meaning it was reserved but not yet paid. That’s up from $2.63 billion at the end of June and $1.63 billion a year ago. Therefore, Tesla’s actual spending is ahead of its reported cash capital spending.
Where Tesla’s Q3 Free Cash Flow Came From
Tesla reported $6.26 billion in operating cash flow and $1.53 billion in free cash flow after capital spending. Here’s how it got there:
| Third quarter of 2026 | Amount |
|---|---|
| Net income | 0.80 billion dollars |
| Depreciation, amortization and impairment | +1.85 billion dollars |
| Stock-Based Compensation | +$1.17 billion |
| Other non-monetary items (currency, taxes, bitcoin, SpaceX) | -0.15 billion dollars |
| Changes in working capital | +$2.59 billion |
| Operating cash flow | $6.26 billion |
| capital expenditure | -4.73 billion dollars |
| free cash flow | 1.53 billion dollars |
Depreciation and stock compensation are normal add-ons. They reduce profits without using cash.
The working capital line is the one to monitor. Without that $2.59 billion, Tesla’s free cash flow would have been about negative $1.06 billion.
Most of it came from invoices that Tesla has not yet paid. Accounts payable increased $1.92 billion in the quarter and accrued liabilities increased $1.95 billion, including $722 million more in “accrued purchases,” goods that Tesla received but had not been invoiced.
Another $1.26 billion came from deferred revenue, primarily energy storage. Tesla’s deferred energy revenue rose to $3.3 billion from $2.31 billion. But not all of that is cash. Tesla revealed that it billed SpaceX $588 million for “undelivered” Megapacks, which SpaceX had not paid at the end of the quarter. That amount is included in both deferred revenue and accounts receivable, which increased by $565 million.
Those gains were partially offset by a $1.82 billion increase in prepaid expenses and other assets, and a small inventory build.
If you also count the $1.03 billion increase in unpaid capital expenditures, Tesla’s free cash flow in terms of “spending” came closer to $500 million.
Tesla’s debt plans
The capital cut comes a month after Tesla signed new credit lines worth $30 billion. The 10-Q details them: a $20 billion delayed term loan due in 2029, and $10 billion of revolving credit replacing a $5 billion line of credit. Tesla had not tapped either at the end of the quarter and had $45.4 billion in cash and investments.
Electrek’s opinion
None of this is inappropriate under current accounting standards, which we can argue are pretty horrible. Paying suppliers later, collecting deposits, and reserving capital expenses when incurred are somewhat normal accounting things, and Tesla disclosed them. But they explain why the “$1.5 billion free cash flow” headline in Wednesday’s results says less about the business than it seems.
Underneath, Tesla earned $718 million in operating income, less than its $1.17 billion in stock compensation, and before working capital, it burned through cash. The time elements that helped this quarter will be reversed when invoices are due and Megapacks are shipped.
The capex cut is the most interesting sign. Six months ago, Tesla was telling investors that 2026 would be a year of big investments to develop AI computing, Optimus and Cybercab. It is now lowering the target in its 10-Q rather than letter to shareholders, while racking up $30 billion in debt. Either the projects are being delayed until 2027 or Tesla is spending less to protect its cash. Tesla should say which one.
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