Tesla's Free Cash Flow Just Turned Positive. Here's Why That's Only Half the Story.

Tesla reported $1.53 billion in positive free cash flow for Q3 2026, a turnaround from the previous quarter's $1.09 billion deficit. However, the improvement was primarily driven by lower capital expenditures ($4.73B vs. expected $7.77B) rather than improved profitability. Operating income fell 56% year-over-year to $718 million, and the company reduced its full-year capex guidance from $25 billion to $20 billion. With ambitious spending plans for AI, robotics, and manufacturing still ahead, Tesla faces questions about funding its growth without straining its balance sheet.