Tesla’s $25 Billion Gamble: Robotaxi Production Begins as Cash Flow Turns Negative

Tesla starts Cybercab production in Texas but warns of slow ramp, $25B capex, and negative free cash flow. NHTSA closes Model Y probe, recalls 173 Cybertrucks.

The first production-spec Tesla Cybercab has rolled off the line in Texas, but the celebrations are tempered by a sobering financial reality. The electric-vehicle maker has jacked up its 2026 capital expenditure plans to over $25 billion, a nearly threefold increase from last year’s roughly $9 billion, and warned investors that free cash flow will remain negative for the remainder of the year.

The “VIN Zero” Cybercab, finished in glossy gold rather than the matte of earlier test vehicles, marks the official start of serial production at Gigafactory Texas. But CEO Elon Musk has been quick to manage expectations, cautioning that volume will ramp “extremely slowly” at first given the vehicle’s entirely new supply chain. He expects exponential growth in unit numbers only toward year-end, with meaningful revenue contributions unlikely before 2027.

The two-seat robotaxi lacks both a steering wheel and pedals, raising obvious regulatory questions. Rather than seeking a special exemption, Tesla appears to be self-certifying the vehicle under US safety standards—a sticker on one model already confirms this approach, theoretically allowing unlimited production. The commercial rollout, however, depends entirely on software: unsupervised autonomous driving is expected to reach customers in the fourth quarter.

Tesla is simultaneously building out its own ride-hailing service. Operations have already started in Texas using retrofitted Model Ys, with launches planned for Miami, Orlando and Las Vegas in the first half of this year. The Cybercab, which contains 50 percent fewer parts than a Model 3, will eventually replace those vehicles.

Regulatory Win and a Parallel Recall

On the regulatory front, Tesla secured a notable victory. The National Highway Traffic Safety Administration has closed its three-year investigation into 120,089 Model Y vehicles from the 2023 model year without ordering a recall. The probe was triggered by two reports of steering wheels detaching while driving.

NHTSA classified both incidents as isolated. The affected vehicles, built in the first week of January 2023 at Tesla’s Austin and Fremont factories, lost their steering wheels within the first 400 miles because securing bolts were missing after post-production repairs. The agency has reserved the right to reopen the case if new evidence of a systemic problem emerges.

Separately, Tesla has recalled 173 Cybertrucks from the 2024 to 2026 model years. Vehicles equipped with 18-inch wheels may develop cracks in the brake disc hubs, potentially causing loose wheel bolts. The company is replacing brake discs, hubs and nuts free of charge.

Software Update for the Older Fleet

For owners of vehicles with Hardware 3—built between 2019 and 2023—Tesla is rolling out a new software package called “FSD V14 Lite.” The US launch is scheduled by the end of June 2026, with international markets including Europe, Australia and Canada to follow later, pending technical validation and local approvals.

The pared-down version includes automatic parking at the destination, improved city navigation and autonomous reversing. But it remains a Level 2 driver-assistance system: the driver must stay attentive at all times. Musk has acknowledged that Hardware 3 lacks the memory bandwidth and camera resolution needed for full autonomy.

Financials: Beat on Earnings, Miss on Revenue

Tesla’s first-quarter results painted a mixed picture. Earnings per share came in at $0.41, narrowly beating the analyst consensus of $0.39. Revenue of $22.39 billion, however, fell short of the $22.96 billion expected.

The investment splurge is directed at the “Terafab” chip project in Austin, along with ramping up Cybercab and Optimus robot production. CFO Vaibhav Taneja has explicitly warned that free cash flow will stay negative through the rest of 2026. On the production side, Tesla reported a 6 percent increase in deliveries for the first quarter.

The stock is trading at around €319 ($322), roughly 14 to 15 percent below its level at the start of the year. With a relative strength index of 34, the shares are in oversold territory—a technical signal that reflects the market’s anxiety about the massive capital outlay. Tesla’s weekly production numbers from Texas will now serve as the key metric for investors gauging whether the unbox manufacturing method, which assembles the vehicle from large modules, can deliver the scale that Musk has promised.