Tesla’s Robotaxi Milestone Arrives, but a $5 Billion Spending Shock Steals the Spotlight

Elon Musk finally delivered the proof investors had been waiting for: the first driverless Cybercab has rolled off the production line in Texas. A brief video posted on X showed the steering-wheel-free vehicle cruising on public roads, marking a symbolic breakthrough in Tesla’s long-promised autonomous future. Yet rather than celebrating, the market sent the stock sliding—down roughly 6% on the week to €320.70—as the eye-watering cost of this transformation took center stage.

The Cybercab Era Begins

Regulators have removed the annual cap on autonomous vehicle production for Tesla, allowing the company to build the Cybercab in unlimited numbers. The ramp-up to mass production is targeted for later this year, though Musk has cautioned that meaningful revenue from the robotaxi platform will not materialize until 2027. In the meantime, Tesla is expanding its unsupervised autonomous ride-hailing service, which is already operational in Dallas and Houston, with plans to add Miami, Las Vegas and Phoenix in the first half of the year.

The push into autonomy is gaining traction with consumers. The number of Full Self-Driving (FSD) subscribers has surged past 1.28 million, representing a 51% jump year-over-year. That growth provides a glimpse of the recurring revenue stream Tesla hopes will eventually justify its massive capital outlays.

A Quarter of Contradictions

Tesla’s first-quarter results painted a decidedly mixed picture. Revenue came in at $22.39 billion, up 16% from a year ago but slightly below Wall Street’s expectations. Adjusted earnings per share of $0.41, however, beat analyst forecasts. The automotive gross margin surprised to the upside, climbing to 19.2% as lower material costs offset pricing pressures. Tesla’s energy storage business also posted a record margin, even as segment revenue edged lower.

The real bombshell landed during the post-earnings call with analysts. Chief Financial Officer Vaibhav Taneja revealed that capital expenditures would exceed $25 billion this year—$5 billion more than previously guided. The consequence: management now expects negative free cash flow for the remainder of 2025 as it pours money into the Cybercab production line, AI infrastructure and other strategic projects.

Should investors sell immediately? Or is it worth buying Tesla?

Wall Street’s Deepening Divide

The spending shock has sharpened the split among analysts. Wedbush’s Dan Ives views the FSD software as a future margin multiplier that will eventually reward patient investors. JPMorgan’s Ryan Brinkman remains deeply bearish, warning that even a solid earnings beat cannot shield the stock from a sharp correction given the cash burn ahead.

A technical hurdle adds another layer of complexity. Older Tesla vehicles equipped with Hardware 3 will be unable to run the upcoming unsupervised driving system. The company is planning discounted upgrade paths, but the limitation underscores the challenge of retrofitting an entire fleet for full autonomy.

What Comes Next

Tesla’s immediate priority is scaling Cybercab production fast enough to justify the $5 billion spending overrun. Failure to do so would put further pressure on profit margins that are already under scrutiny. Musk has promised a more detailed unveiling of the Optimus humanoid robot later in the summer, though he has been deliberately vague on timing, citing concerns that competitors would quickly copy early prototypes.

For now, the stock trades well below its 200-day moving average of €345.44, with year-to-date losses exceeding 14%. Until the Cybercab ramp delivers tangible results or Optimus emerges as a credible new revenue stream, the market’s focus will remain fixed on Tesla’s balance sheet—and the enormous tab for its autonomous ambitions.