Tesla's Cash Crunch Has Arrived-Blame Its AI Ambitions

Tesla is set to borrow a lot more money as it invests heavily in its AI ambitions.

Tuesday, the EV maker entered into $25 billion in new credit facilities, including a $20 billion three-year delayed draw facility, an $8 billion senior unsecured revolving credit facility, and a $2 billion senior unsecured 364-day facility. That's $30 billion, but Tesla also terminated a $5 billion revolving credit agreement.

"The proceeds of loans under the Facilities, and letters of credit issued under the Five-Year Revolving Facility, may be used for general corporate purposes or for any other purpose not otherwise prohibited by the applicable Credit Agreement," reads part of Tesla's filings.

Tesla has generated consistent free cash flow since 2019, but free cash flow is expected to be negative $10 billion in 2026 as capital spending rises from about $8.5 billion in 2025 to $25 billion this year. Tesla is spending more on AI compute, capacity to build AI-trained robots, and its AI-trained robot-taxi service, which launched in Austin, Texas, in June 2025.

"We suspect facilities will be drawn to support Tesla's elevated near/mid-term capex," wrote Barclays analyst Dan Levy in a Tuesday report. "Debt likely to also fund Robotaxi expansion."

He rates Tesla shares Hold. GLJ Research analyst Gordon Johnson rates Tesla shares Sell. He sees cash use accelerating to about $7 billion to $8 billion in the second half of 2026. Free cash flow was modestly positive in the first half of the year.

Tesla ended the second quarter with $43.5 billion in cash and short-term investments. Now, it has more available to build its business. Wall Street sees capital spending remaining north of $20 billion annually until the end of the decade. Analysts project positive free cash flow returns in 2029, when revenue reaches almost $200 billion, up from an expected $106 billion in 2026.

Debt can make investors nervous, but everyone knows Tesla spending plans. Shares of the EV maker were down a modest 0.9% in premarket trading at $349.67, while S&P 500 and Dow Jones Industrial Average futures were both up about 0.1%.

Coming into Wednesday trading, Tesla stock was down 22% year to date and down 20% over the past 12 months.