Tesla (TSLA) confirmed that it is increasing its planned capital spending to $10 billion this year as it tries to achieve its next growth phase.
Lately, Tesla has described itself as being “between two major growth waves”. The first wave was the ramp-up of Model 3 and Model Y production, which appears to be now plateauing.
The second wave is expected to be the ramp-up of its next-generation vehicles, which are coming in late 2025.
In the meantime, Tesla is stuck with its current lineup, which can still grow a bit, but at nowhere near the pace of Model 3/Y.
In order to prepare for this next phase of growth and other products in the work, Tesla has disclosed upcoming record spending, according to a new SEC filing.
In its 10-K SEC filing today, Tesla confirmed that it spent $8.9 billion in capital expenditure in 2023:
Capital expenditures amounted to $8.90 billion in 2023, compared to $7.16 billion in 2022, representing an increase of $1.74 billion. Sustained growth has allowed our business to generally fund itself, and we will continue investing in a number of capital-intensive projects and research and development in upcoming periods.
That was a new record of spending for Tesla in 2023, but now the company says that it will be even higher this year.
Tesla disclosed that it plans to spend more than $10 billion this year:
Owing and subject to the foregoing as well as the pipeline of announced projects under development, all other continuing infrastructure growth and varying levels of inflation, we currently expect our capital expenditures to exceed $10.00 billion in 2024 and be between $8.00 to $10.00 billion in each of the following two fiscal years.
The company doesn’t disclose exactly where this money is going to go, but the automaker is always heavily investing in manufacturing operations and it is still growing Gigafactory Texas and Berlin.
It’s possible that Tesla will start spending more on Gigafactory Mexico this year – although the company is not committing to a start of construction any time soon.
One of the categories that could be driving Tesla’s higher spending this year is EV infrastructure. Tesla is growing the Supercharger network at an incredibly fast pace, and it’s a capital-heavy category. You have to build the stations and install them at full cost while seeing the return over years, if not decades, as EV drivers start to use these stations.
Top comment by Ian Ollmann
This is somewhat good to hear. During AAPL's impressive growth phase for the iPhone, you could basically predict next year's results based on this year's investment. I'm sure the turnaround time could be longer for car manufacturing, but a heavy investment strongly indicates management sentiment about future financial performance. If that trend applies here, then we should expect modest TSLA growth, since CapEX is running about 20-25% ahead of 2021 & 2022. Unfortunately, we've had a bit of inflation over that period, so the impact might be a bit more muted than that, and it is not AAPLs consistent 2x over last year that marked that great ascension.
I personally find this rate of growth to be timid. It is clear TSLA could be doing a lot more in the grid energy and HVAC markets, and could be doing more to increase its battery making capacity which could gate all of these things.
In 2024, Tesla needs to grow the Supercharger network faster and bigger than ever, especially in North America where it will finally start to on-board non-Tesla drivers in a more meaningful way for the first time.
Tesla also continues to invest billions in computing power to support its AI initiatives. The company recently disclosed a new $500 million Dojo computer cluster coming to New York. CEO Elon Musk also confirmed that Tesla will spend even more money on NVIDIA and AMD processors this year.
Interestingly, the company guides that spending will go down in 2025-2026 compared to 2024.
Where else do you think Tesla will spend a lot of money in 2024? Let us know in the comment section below.
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