Tesla Shares Fall 2% After Cut to 2026 Spending Forecast

Tesla shares fell 2% on Thursday, October 22, after the electric-vehicle maker lowered its 2026 capital spending forecast to about $20 billion from more than $25 billion, Economic Times Markets reported. The reduction sharpened questions about the pace of investment behind chief executive Elon Musk’s AI and robotics plans.

The company announced the revised forecast on Wednesday after third-quarter spending on AI and robotics came in well below expectations. That lower spending helped produce unexpectedly positive free cash flow—a financial benefit that nevertheless left investors questioning the pace of expansion.

Tesla’s leadership attributed the adjustment to more efficient deployment of capital. The company did not specify which areas would receive less spending.

A high valuation keeps attention on future growth

Josh Gilbert, lead analyst at eToro, described the challenge as balancing investment with visible returns. In his assessment, investors can welcome bigger spending plans when the payoff is clear, while a reduced budget can signal slower growth. He linked the muted response to otherwise stronger-than-expected results to expectations surrounding Cybercab and Optimus.

Tesla shares have declined about 14% this year, against a roughly 15% rise in the Nasdaq. The stock was also about 23% below its record intraday high of $498.83, reached in December.

Despite that decline, Tesla retained a substantial valuation premium over traditional US automakers. It traded at 188.24 times estimated forward earnings, compared with 6.58 times for Ford and 5.16 times for General Motors. Those multiples are based on earnings estimates, rather than realised future profits.

Potential SpaceX deal adds another uncertainty

Musk said on Tuesday that Tesla and SpaceX had established special committees to discuss a potential merger. A combination could bring AI, vehicles, satellites and rockets into a group potentially worth about $3.5 trillion; that figure is a prospective valuation, not an announced transaction price.

Tesla’s stronger cash position could be useful in a combination with the more capital-intensive SpaceX. But the discussions also introduce uncertainty beyond Tesla’s own investment programme.

Russ Mould, investment director at AJ Bell, warned that investors could face an extended wait for clarity and that a potential combination might encounter substantial regulatory obstacles. The discussions do not establish that a merger will proceed.