Tesla just increased its revenue by $25 billion. This is where the money goes.

Tesla CEO Elon Musk’s earnings call for the company’s first quarter is a financial headline — or, depending on the investor’s view, a warning. Tesla’s capital spending will rise to $25 billion in 2026, surpassing its annual spending as it races ahead of the competition and transitions to an AI and robotics company, according to first quarter earnings report.

This figure, which includes what Tesla plans to spend on material things outside of its daily budget, is three times higher than its annual budget in previous years. In comparison, Tesla’s annual expenses were $8.5 billion in 2025, $11.3 billion in 2024, and $8.9 billion in 2023.

Tesla announced in January that it expects capital expenditures to exceed $20 billion in 2026, which has already risen to cover its AI initiatives, including businesses for computing infrastructure and data centers, as well as the growth and process of manufacturing and R&D lines, among other things.

This increase of $5 billion indicates that this will require more money than originally planned. But so far, its operating income for the quarter, which was $2.5 billion, was in line with previous quarters, the report showed.

Of course, Musk sees this as a good thing, an opinion that many owners may share because he positions Tesla as a company that will shape its future, which is AI and robotics.

“By 2026 we will be expanding our investment into the future,” Musk said on Wednesday. “So you should expect to see a big increase in current spending, but I think it’s reasonable to increase future spending.”

Musk was quick to point out that Tesla isn’t the only company raising its operating budget. For example, Amazon has confirmed $200 billion in capital spending in 2026, through “AI, chips, robotics, and low-Earth satellites.” Google is expected to spend between $175 billion and $185 billion on capital expenditures in 2026, up from $91.4 billion last year.

The increase in Tesla’s investment coincides with Musk’s desire to transform the company beyond building and selling EVs, solar, and energy storage.

Some of that capex goes toward Tesla’s technology like the battery and AI software, according to Musk. The company plans to invest in AI studies, chip design, and “foundation” to increase manufacturing, as well as investing in robotaxi projects and its new semiconductor research fabric in Austin.

The Fremont, California factory will take over some of the capital as the company finishes production of the Tesla Model S and Model X and begins mass production of its Optimus humanoid robot. The company said Wednesday that it has repurposed space outside its Austin factory to house a dedicated Optimus station.

Tesla plans to increase its internal production of Optimus for testing and then “probably” make Optimus “useful outside of Tesla sometime next year,” he said.

Tesla is also investing to boost its mobility “across the board,” Musk said, adding that this covers batteries, power, and silicon for AI.

All these investments, which CFO Vaibhav Taneja said will take several years, come with a real cost. The company, which was pleased with the drop in prices of 4% because, among other things, it is unexpected $1.4 billion in free movementwill enter the negative phase later this year, said Taneja.

Tesla’s shares took off their gains in a short-term sale as Musk and Taneja pitched these plans to investors. However, Tesla still has a lot of money. At the end of the first quarter, Tesla reported $44.7 billion in cash, cash equivalents, and minor expenses.

“Although this may seem like a lot, and we will have the effect of non-cash payments for the rest of the year, we believe that this is a good way to set up the company for the next period,” said Taneja.