Tesla CEO Elon Musk said he expected the electric vehicle maker’s capital expenses would rise “substantially in the future” after it surprised investors on Wednesday with positive cash flow in the first quarter.

“We’re going to be substantially increasing our investments in the future, so you should expect to see significant increase in capital expenditures,” Musk told analysts on a conference call. He said the spending was “well justified for a substantially increased future revenue stream,” noting big capex plans at top tech companies.

Tesla CFO Vaibhav Taneja boosted the company’s capital expenses forecast to $25 billion this year, from $9 billion in 2025. In January, the company said it would spend more than $20 billion in 2026.

Tesla is in the middle of one of the most expensive bets in its history. Musk pivoted the electric vehicle maker’s focus to building artificial-intelligence-powered self-driving cabs and humanoid robots, and much of Tesla’s $1.45 trillion market cap rests on that vision.

The company will have negative free cash flow for the rest of 2026, Taneja said. In the first quarter, it recorded positive free cash flow of $1.44 billion, compared with estimates for a cash burn of $1.43 billion, according to data compiled by LSEG. “We are in a very big capital investment phase, which is going to start now and would last a couple of years,” he said.

The company’s shares, which had risen as much as 4% after it reported first-quarter results after the bell, gave up nearly all gains after the executives’ remarks on the call.

First-quarter profit topped Wall Street targets in a sign that the electric vehicle maker was holding the line on costs in a difficult global environment. Tesla’s capital expenditures in the quarter were about 40% below what analysts on average were expecting.

The Austin, Texas-based automaker reported revenue of $22.39 billion for the three months ended March 31, compared with analysts’ average estimate of $22.6 billion, according to data compiled by LSEG.

Vehicle sales rise amid pressure

Tesla delivered fewer vehicles than Wall Street expected in the first quarter, but deliveries were up 6.3% from a year earlier, when protests against Musk’s far-right politics had weighed on demand.

“We saw continued growth in demand for our vehicles in markets in APAC and South America, while also seeing a rebound of demand in both EMEA and North America,” Tesla said in a statement.

Tesla’s core automotive business has come under pressure as competitors introduce newer models, often at lower price points. The expiration of a US electric-vehicle tax incentive has added to the strain.

Tesla is developing an all-new smaller, cheaper electric SUV, with plans to start production in China and potentially expand production to the US and Europe, Reuters has exclusively reported. The project remains in the early stages of development and is not expected to reach production in the near term.

Tesla in 2024 canceled plans to build a cheaper EV platform and instead introduced lower-priced “Standard” versions of its best-selling Model 3 and Model Y to attract more price-sensitive buyers. However, analysts have cut their estimates for annual deliveries, with some expecting a drop this year.

Wall Street expects the company to deliver 1.67 million vehicles in 2026, representing a 2.4% increase, according to Visible Alpha data.

Tesla’s energy generation and storage unit has emerged as a key bright spot, buoyed by sustained demand for grid-scale batteries that support renewable energy and help stabilize electricity networks.

Robotaxi and Cybercab

Investors have increasingly turned their attention to Musk’s push into self-driving technology and robotics, seeking clearer evidence that the autonomy narrative is shifting from promise to commercial reality.

Tesla said it was gearing up to start volume production of its Cybercab – a fully autonomous vehicle without a steering wheel or pedals – this year. The company had in January said production ramp would start in the first half.

Tesla started rolling out its Model Y robotaxis in Dallas and Houston, it said on Saturday, marking further expansion of its nascent service in the United States since its Austin launch last year.

Preparations are under way to expand the service to five other cities in Arizona, Florida and Nevada, Tesla said. That expansion was to take place in the first half of the year, according to plans laid out in January, though the company has previously missed similar timelines.

Dutch vehicle authority RDW has notified the European Commission of its plan to seek European Union-wide approval for the Full Self-Driving software system, the regulator said earlier this month.