Tesla has opened $30 billion in lines of credit, according to a regulatory filing, as the company’s profits have dropped and spending is set to rise sharply.
The loans come from Citi and Wells Fargo, with terms between one and five years. They replace a previous $5 billion credit line that Tesla had filed for but had no current debt from. The company says it doesn’t expect to draw from the credit line in 2026, but the end of 2026 is only three months away, and a lot of spending is planned for next year.
The Profit Problem
For its first decade and a half, Tesla’s sales and revenue basically did nothing but increase. That lasted until 2024, when Tesla went from 38% growth the prior year to a 1% drop.
Since then, profitability has been rough. The company has had to book questionable one-time profits to eke out positive numbers. Even with those, profits have remained low. One downward pressure has been Tesla’s increased capital expenditures as it chases ideas like cars without steering wheels and the promise of a trillion-dollar robot army.
CapEx more than doubled in the last quarter. Tesla expects to spend a total of $25 billion in 2026, up from $8.5 billion in 2025. Analysts expect similar spending in 2027.
The Carbon Credit Factor
One factor often overlooked is Tesla’s revenue from selling regulatory and carbon credits. The company has generated over $10.4 billion from these sales since 2017. In 2024, carbon credits brought in a record $2.76 billion, accounting for 20% to over 30% of Tesla’s quarterly or annual net income.
But those credit revenues have cooled in 2026, dropping to roughly $146 million in the second quarter compared to prior peaks of $400 million to $700 million per quarter. Ironically, the decline followed Musk’s political support for politicians who ended the programs that generated the credits.
The Cash Flow Concern
Most worryingly, last quarter Tesla was cash flow negative for the first time since Q1 2024, when it experienced a massive drop in sales. Prior to that, Tesla had been cash flow positive for years.
Despite having some $43 billion in cash in the bank as of its last quarterly report, Tesla felt the need to take out a large loan to finance its operations and fund its ventures into product ideas that may not produce revenue anytime soon.
Tesla has had little to show for its increased CapEx so far. While it is rolling out three products this month, all three were announced a decade ago in some form. One still doesn’t work, one has been slow to ramp, and one seems to exist just to sell investors on merger hype.
The Bottom Line
Tesla has opened $30 billion in credit lines from Citi and Wells Fargo as profits have fallen and capital expenditures have soared. The company was cash flow negative last quarter for the first time since early 2024. Tesla’s carbon credit revenues have also cooled sharply. Despite having $43 billion in cash, Tesla is borrowing heavily to fund operations and ambitious product plans.
My Opinion
Tesla has $43 billion in cash. It just borrowed $30 billion more. That is not a company in trouble. That is a company that is betting everything on a future that may never arrive.
The problem is not the loan itself. It is what the loan reveals. Tesla’s profits have been razor-thin. It has been propped up for years by carbon credits — a revenue stream that is now drying up because Elon Musk backed politicians who killed it. Its core business, selling cars, is no longer growing. And it is spending billions on products that were announced a decade ago and still don’t work.
The Cybercab doesn’t work. The Semi has been slow to ramp. The Roadster exists to sell investors on merger hype. Meanwhile, Tesla is telling shareholders to wait for a robot army and cars without steering wheels.
