Tesla profit disappoints as Elon Musks AI spending surge leads to cash burn

Tesla on Wednesday missed analysts’ profit forecasts for the second quarter and, for the first time in more than two years, reported negative free cash flow as the Elon Musk-led EV maker accelerated spending on infrastructure for its AI and robotics ambitions.Shares were down about 2.5% in extended trading.Musk plans to spend more than $25 billion this year, nearly triple last ​year’s $8.53 billion, as he bets on Tesla’s AI-powered self-driving technology and robotics, over its auto business, which still is the core revenue generator.But the pivot is expensive, and while much of Tesla’s valuation hangs on the promise of potentially high-margin revenue streams, the spending is heightening investor scrutiny.Thomas Monteiro, senior analyst at Investing.com, said it could become difficult for Tesla to keep up with its recent capital-spending pace as its cash burn worsens.“Given that most of the Tesla premium rests on future narratives, every capex dollar Tesla commits will be judged more harshly than it was a year ago,” he said.Adjusted profit in the quarter ended June 30 was 33 cents per share, versus analysts’ average expectation of 51 cents per share, according to data compiled by LSEG.Tesla’s profitability was hurt by higher operating expenses driven by AI, lower average selling prices and weaker regulatory credit revenue even as vehicle deliveries rose, the EV maker said on Wednesday.Capital expenditure in the quarter came in at $5.8 billion, compared with the expectation of about $6.2 billion.Tesla reported negative free cash flow of $1.1 billion, compared with analysts’ expectation for cash burn of $3.3 billion.EV sales in the quarter helped assuage some fears for now. Tesla delivered 480,126 vehicles in the second quarter, above Wall Street expectations and up from 384,122 vehicles a year earlier.The Austin, Texas-based automaker reported revenue of $28.24 billion for the three months ended June 30, compared with analysts’ a...