Tesla plans to more than double capital spending to a ​record high of more than $20 billion this year - but little of it will go to its traditional business of selling electric vehicles to human drivers.

The company, ⁠which last year lost its global EV sales crown to China's BYD, is instead shifting investment to yet-unproven business lines such as fully autonomous vehicles and humanoid ⁠robots, based ‌on executive comments on Wednesday's earnings call.

Highlighting the change, CEO Elon Musk said Tesla would end production of its Model X SUV and Model S sedans and instead use the space in its California factory to make humanoid robots.

"This is ⁠going to be a very big capex year," he said. "We're making big investments for an epic future."

Most of the record investment will be spent on production lines for the Cybercab, a fully autonomous vehicle without a steering wheel and pedals, the long-promised Tesla semi-truck, Optimus robots and plants for battery and lithium production, Chief Financial Officer Vaibhav Taneja said.

Tesla is still reliant on human-driven EVs for most of ⁠its sales, but its valuation far exceeds any other ​automaker, putting it more in league with major tech companies. Much of that value hangs on investors' beliefs that Musk will deliver on lofty promises of delivering robotaxis and humanoid ‍robots backed by the company's investment in artificial intelligence.

It joins Facebook-parent Meta Platforms, Microsoft and Alphabet in planning sharp increases in capital spending this year, as those companies invest heavily in hardware ​and data centers to support AI model training and customer demand.

Tesla shares were up 2.8% in premarket trading on Thursday.

Scott Acheychek, chief operating officer of REX Financial, which manages ETFs with exposure to Tesla stock, argued that Tesla's car business was no longer the main focus. "The bigger story," he said, "is the business model transition now underway" as Tesla focuses on autonomous driving.

'NECESSARY SPENDING'

Andrew Rocco, stock strategist at Zacks Investment Research, said he viewed the $20 billion as "necessary spending."

"If Optimus is going to be a best-selling product, the AI must be trained as well as possible," he said, adding the planned spending gives him confidence that Musk's "sometimes loose timelines will actually be honored."

The $20 billion is more than double the $8.5 billion in capital spending last year, and significantly above the prior record of $11.3 billion in 2024.

Taneja said on the call that Tesla has more than $44 billion in cash and investments ⁠on the books that it can use to fund the investments. He signaled this year ‌was not likely to be the end of increased spending, adding the company could look to pay for the investments "through more debt or other means."

Musk said Tesla was embarking on some of the spending projects not for fun, but rather "out of desperation".

"Can other people, please, for the love ‌of God, in the ⁠name of all that is holy, can others please build this stuff?" Musk said, referring to spending on cathode and lithium refining. "It's very hard to ⁠build these things."

(Reporting by Chris Kirkham in Los Angeles and Akash Sriram in Bengaluru; Editing by Jamie Freed)