The Biggest Risk Facing Tesla Stock Right Now

Tesla 's (NASDAQ: TSLA) biggest near-term risk lies in the two things that CEO Elon Musk believes are its biggest value-creation drivers: Cybercab/robotaxis and Optimus robots. In both cases, the company is aggressively ramping up up-front spending to support its development.

That's fine in itself, but it does expose the company to the risk of bleeding cash if robotaxi and Optimus don't generate earnings and cash flow in line with management's plans.

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Tesla's free cash flow (FCF) is becoming a stick the bears are using to beat the stock with. The company's capital spending is set to turn it from a cash-generative company to a net user of cash, as its earnings and operating cash flow (OCF) generation fail to offset the increase in spending. The dynamics of Wall Street analysts are shown in the chart, using data courtesy of Visible Alpha.

Note how OCF growth, mainly from the electric vehicle (EV) business, isn't enough to fully offset the increase in capital spending, and Wall Street expects Tesla to have cash outflows from 2026 to 2028, only to return to FCF generation in 2029 as robotaxi and Optimus revenue starts to kick in, leading to the beginning of a multiyear growth in FCF as robotaxi/Optimus generate a long-term stream of recurring income.

Based on these Wall Street projections, investors shouldn't be perturbed. After all, there's a reason for the elevated levels of capital spending, and it comes down to investing in the growth of robotaxi and Optimus, as well as substantive actions to secure and de-risk its EV and energy supply chain, such as investments in a lithium refinery, AI compute, and lithium iron phosphate (LFP) battery production.

The ultimate aim is to support long-term growth that would otherwise be threatened if these investments aren't made.

However, if there's a delay in the growth of robotaxi/Optimus revenue, there will be negative consequences for Tesla's cash flow, not least because it won't be able to significantly moderate capital spending on essential growth investments. This would put more pressure on the EV business to generate the earnings and cash flow necessary to support it, even as Tesla's focus shifts toward investment in Cybercab/robotaxi and Optimus.