Tesla has increased its capital expenditures to $25 billion in 2026, three times higher than its annual capex budget, according to CEO Elon Musk. The increase is part of Tesla's strategy to compete with the competition and transition into an AI and robotics company. The capex is intended to cover investments in AI initiatives such as compute infrastructure and data centers, manufacturing and R&D production lines, and expansion of manufacturing. However, this $5 billion increase may require more money than previously planned. Some of the capex spend will be towards Tesla’s core technologies such as battery and AI software, and investment in its robotaxi operations and its new semiconductor research fab in Austin. Despite this increase, Tesla is still on high levels of cash and anticipates negative free cash flow for the rest of the year.