Tesla Releases Second Quarter 2026 Financial Results

Rhea-AI Summary

Tesla (NASDAQ: TSLA) reported Q2 2026 revenue of $28.24 billion, up 26% year over year, driven by record quarterly vehicle deliveries and strong Services and Other growth. GAAP operating income fell 57% to $398 million, compressing operating margin to 1.4% from 4.1%.

GAAP net income attributable to common stockholders declined 5% to $1.11 billion ($0.32 diluted EPS), with a large contribution from interest and other income, including a SpaceX equity gain. Non-GAAP net income was $1.15 billion ($0.33 diluted EPS). Operating cash flow rose 85% to $4.70 billion, but capital expenditures surged 142% to $5.79 billion, resulting in negative free cash flow of $1.09 billion. Cash and investments reached $43.52 billion. Automotive revenue grew 23% to $20.52 billion, energy revenue 13% to $3.14 billion, and Services and Other 50% to $4.58 billion. According to Tesla, Q2 marked its first time exceeding $100 billion in trailing twelve‑month revenue.

Positive

• Total revenue up 26% YoY to $28.24 billion
• Operating cash flow up 85% YoY to $4.70 billion
• Cash, equivalents and short-term investments up 18% YoY to $43.52 billion
• Vehicle deliveries up 25% YoY to 480,126 units
• Energy storage deployments up 41% YoY to 13.5 GWh
• Active FSD subscriptions up 56% YoY to 1.48 million

Negative

• GAAP operating income down 57% YoY to $398 million; 1.4% margin
• Free cash flow swung to -$1.09 billion from $146 million YoY
• Automotive regulatory credit revenue down 67% YoY to $146 million
• Energy segment gross margin down to 20.4% from 30.3%
• Non-GAAP diluted EPS down 18% YoY to $0.33
• Operating expenses up 47% YoY to $4.35 billion

News Explained

Cybercab production and testing have begun, but deployment into Tesla’s Robotaxi fleet remains a future step.

Tesla has released its second-quarter 2026 results, and reports that Cybercab production and public-road engineering tests commenced during the quarter; the company describes these as precursors to Robotaxi-fleet deployment rather than completed fleet deployment.

Tesla says Robotaxi is live in seven major metros, with several operations ramping unsupervised and San Francisco using supervised FSD under a California permit.

The outlook says deliveries and deployments will depend partly on how Tesla allocates output between customer sales and its owned fleet, leaving the near-term recipient of some production unspecified.

The stated resolution points are Cybercab's move into Robotaxi fleets and the planned 2026 production starts for Tesla Semi and Megapack 3, plus anticipated production from first-generation Optimus lines.

Market reaction: TSLA -14.52% on Q2 2026 earnings report

-14.52% 2.7x vol

38 alerts

-14.52% News Effect

-13.2% Trough in 23 hr 39 min

-$241.74B Valuation Impact

$1.42T Market Cap

2.7x Rel. Volume

On the day this news was published, TSLA declined 14.52%, reflecting a significant negative market reaction. Argus tracked a trough of -13.2% from its starting point during tracking. Our momentum scanner triggered 38 alerts that day, indicating elevated trading interest and price volatility. This price movement removed approximately $241.74B from the company's valuation, bringing the market cap to $1.42T at that time. Trading volume was elevated at 2.7x the daily average, suggesting increased selling activity.

Data tracked by StockTitan Argus on the day of publication.

Market Context

The stock dropped -14.5% in the session following this news. Tesla's Q2 2025 earnings event was foll...

Analysis

The stock dropped -14.5% in the session following this news. Tesla's Q2 2025 earnings event was followed by -8.2%. A strong negative response would extend the platform's earnings downside record; low short positioning was the recorded risk context.

Key Figures

Revenue: $28.24 billion GAAP operating income: $398 million Operating margin: 1.4% +5 more

8 metrics

Revenue $28.24 billion Q2 2026, up 26% year over year

GAAP operating income $398 million Q2 2026, down 57% year over year

Operating margin 1.4% Q2 2026, versus 4.1% a year earlier

Free cash flow -$1.09 billion Q2 2026

GAAP diluted EPS $0.32 Q2 2026, down 5% year over year

Cash and investments $43.52 billion End of Q2 2026

Vehicle deliveries 480,126 vehicles Q2 2026, up 25% year over year

Active FSD subscriptions 1.48 million Q2 2026, up 56% year over year

Previous Earnings Reports

5 past events · Latest: Apr 22 (Neutral)

Same Type Pattern 5 events

Date	Event	Sentiment	24h Move	Catalyst
Apr 22	Q1 earnings report	Neutral	-3.6%	Financial-results release and webcast announcement were followed by a -3.56% reaction.
Jan 28	Q4 earnings report	Neutral	-3.5%	Full-year financial-results release and webcast announcement preceded a -3.45% reaction.
Oct 22	Q3 earnings report	Positive	+2.3%	Record deliveries, storage deployments, revenue and free cash flow accompanied a 2.28% reaction.
Jul 23	Q2 earnings report	Negative	-8.2%	Revenue, income, deliveries and operating margin declines accompanied an -8.2% reaction.
Jul 02	Q2 operating metrics	Positive	+5.0%	Vehicle deliveries, production and storage deployments preceded a -7.49% reaction.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Pattern Detected

Tag-matched earnings events produced an average move of -1.59%, with four of five recorded reactions negative.

Key Terms

gaap, non-gaap, free cash flow, operating margin, +2 more

6 terms

gaap financial

"GAAP operating income fell 57% to $398 million"

GAAP, or Generally Accepted Accounting Principles, are a set of standardized rules and guidelines that companies follow when preparing their financial statements. They ensure consistency, transparency, and comparability across different companies, making it easier for investors to understand and compare financial information accurately. This helps investors make informed decisions based on trustworthy and uniform financial reports.

View in glossary

non-gaap financial

"On a non-GAAP basis, net income was $1.15 billion"

Non-GAAP refers to financial measures that companies use to show their earnings or performance without including certain expenses or income that are often added back to give a different picture. It matters because it can make a company's results look better or more favorable, but it may also hide important costs, so investors need to look at both GAAP (official rules) and non-GAAP numbers to get a full understanding.

View in glossary

free cash flow financial

"producing negative free cash flow of $1.09 billion"

Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.

View in glossary

operating margin financial

"operating margin narrowed to 1.4% from 4.1%"

Operating margin shows how much profit a company makes from its core business activities after paying for costs like wages and materials. It’s useful because it tells you how efficiently a company is running—higher margins mean it keeps more money from each dollar of sales, which can indicate better management or stronger products.

View in glossary

regulatory credits financial

"Automotive regulatory credits, which carry very high margins"

Tradable permits or credits issued by a government or regulator that recognize a company’s compliance with environmental or other industry rules—examples include emissions, fuel-economy, or renewable-energy credits. Companies that earn more credits than they need can sell them to peers that fall short, creating a market value. For investors, these credits can become a source of revenue, reduce compliance costs, or add a fluctuating asset on the balance sheet, similar to having surplus coupons you can sell to others.

stock-based compensation financial

"through stock-based compensation of $989 million net of tax"

Stock-based compensation is when a company pays employees, directors or consultants with shares or the right to buy shares instead of or in addition to cash. It matters to investors because issuing stock or options spreads ownership thinner (like cutting a pie into more slices), which can reduce each existing share’s claim on profits and can also change reported earnings; investors watch it to assess true cost of running the business and how management is incentivized.

View in glossary

AI-generated analysis. How Rhea-AI works. Not financial advice.

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AUSTIN, Texas--Tesla, Inc. (NASDAQ: TSLA) today released its financial results for the second quarter of 2026 by posting an update on its Investor Relations website. Revenue rose 26% year over year to $28.24 billion on record second-quarter vehicle deliveries, while GAAP operating income fell 57% to $398 million and operating margin narrowed to 1.4% from 4.1% a year earlier. Capital spending of $5.79 billion exceeded operating cash flow, producing negative free cash flow of $1.09 billion.

GAAP net income attributable to common stockholders was $1.11 billion, or $0.32 per diluted share ($0.34 basic), down 5% year over year. Most of that profit came from outside the operating business. Income before income taxes of $1.33 billion comprised $398 million of operating income, $422 million of interest income, $81 million of interest expense and $590 million of other income, net. Other income, net swung from negative $535 million in the first quarter of 2026 to positive $590 million in the second. On a non-GAAP basis, net income was $1.15 billion, or $0.33 per diluted share.

Tesla's reconciliation bridges GAAP net income of $1,114 million to non-GAAP net income of $1,153 million through stock-based compensation of $989 million net of tax, an unrealized loss on digital assets of $87 million net of tax, an unrealized gain on the company's SpaceX equity investment of $763 million net of tax, and certain tax items of $274 million. Tesla defines those tax items as the release of valuation allowances on certain California deferred tax assets in the quarter, together with accruals related to Pillar Two.

Operating cash flow was $4.70 billion, up 85%, while capital expenditures rose 142% to $5.79 billion, producing negative free cash flow of $1.09 billion. Cash, cash equivalents and short-term investments ended the quarter at $43.52 billion, a sequential decrease of $1.2 billion that Tesla attributed to the negative free cash flow, itself driven by a $3.3 billion sequential increase in capital expenditures. Tesla also surpassed $100 billion in revenue on a trailing twelve-month basis for the first time.

Q2 2026 Financial Summary

($ in millions, except per share data)	Q2-2025	Q2-2026	YoY
Total automotive revenues	16,661	20,516	23%
Energy generation and storage revenue	2,789	3,139	13%
Services and other revenue	3,046	4,581	50%
Total revenues	22,496	28,236	26%
Total gross profit	3,878	4,751	23%
Total GAAP gross margin	17.2%	16.8%	-41 bp
Operating expenses	2,955	4,353	47%
Income from operations	923	398	-57%
Operating margin	4.1%	1.4%	-269 bp
Adjusted EBITDA	3,401	3,273	-4%
Adjusted EBITDA margin	15.1%	11.6%	-353 bp
Net income attributable to common stockholders (GAAP)	1,172	1,114	-5%
Net income attributable to common stockholders (non-GAAP)	1,393	1,153	-17%
EPS attributable to common stockholders, diluted (GAAP)	0.33	0.32	-3%
EPS attributable to common stockholders, diluted (non-GAAP)	0.40	0.33	-18%
Net cash provided by operating activities	2,540	4,697	85%
Capital expenditures	(2,394)	(5,789)	142%
Free cash flow	146	(1,092)	-848%
Cash, cash equivalents and short-term investments	36,782	43,524	18%

What Moved Revenue and Operating Income

Tesla listed the year-over-year drivers of its revenue increase as higher vehicle deliveries, growth in Services and Other, a positive foreign exchange impact of $0.5 billion, growth in Energy Generation and Storage, and higher automotive ancillary sales driven primarily by an increase in FSD subscriptions. Working against those were lower regulatory credit revenue and a lower vehicle average selling price excluding the currency effect, inclusive of mix.

For operating income, the company cited the same delivery, services, ancillary sales and currency tailwinds, plus a lower average cost per vehicle driven primarily by lower inbound duties. The offsetting items were an increase in operating expenses driven by AI and other research and development projects, stock-based compensation including the 2025 CEO Performance Award and SG&A; lower regulatory credit revenue; the lower average selling price; and an increase in energy warranty-related charges attributed to a vendor cell issue.

Operating expenses of $4.35 billion break down into research and development of $2.37 billion, up 49% year over year, and selling, general and administrative expense of $1.98 billion, up 45%. Automotive regulatory credits, which carry very high margins, fell to $146 million from $439 million a year earlier, a decline of 67%.

Segment Detail

Automotive revenue of $20.52 billion consisted of $20.01 billion of vehicle sales, $146 million of regulatory credits and $364 million of leasing revenue. GAAP automotive gross margin was 16.9%, compared with 17.2% a year earlier. Excluding regulatory credit sales, Tesla's non-GAAP automotive gross margin improved to 16.3% from 15.0%.

Energy generation and storage revenue rose 13% to $3.14 billion on record deployments, but segment gross profit fell to $640 million from $846 million, a decline of 24%, and segment gross margin compressed to 20.4% from 30.3% a year earlier. Tesla attributed part of the operating income decline to increased energy warranty-related charges stemming from a vendor cell issue.

Services and Other revenue rose 50% to $4.58 billion and segment gross profit grew $302 million sequentially to a record $648 million, a 14% gross margin, with growth across all major segments. Tesla said it expects continued profit growth in the segment as its vehicle fleet grows.

Operational Highlights

• Total vehicle deliveries of 480,126, a second-quarter record and an increase of 25% year over year, with total production of 451,758 vehicles, up 10%. Model 3 and Model Y production rose 12% to 442,936 units, while production of other models fell 34% to 8,822.
• Record second-quarter deliveries in several markets, including South Korea, Australia, Colombia, Japan, Taiwan, Thailand, Portugal, the Philippines, Chile, Slovenia and Lithuania. Model YL launched in the U.S. in July.
• Energy storage deployments of 13.5 GWh, up 41% year over year, the company's second-best quarterly deployment total and a record on a trailing twelve-month basis, with record deployments in EMEA supported by Megafactory Shanghai.
• Active FSD subscriptions reached 1.48 million, up 56% year over year, with record net new subscriptions and record North American attach rates of more than 55% of new deliveries.
• The Supercharger network grew to 8,704 stations and 82,357 connectors, with more than 2,400 net new stalls added and network growth of 17% year over year.
• Global vehicle inventory ended the quarter at 15 days of supply, down from 27 days in the prior quarter and from 24 days a year earlier.

Products, AI and Infrastructure

Tesla began production of Cybercab, its purpose-built autonomous vehicle, at Gigafactory Texas. Engineering test drives of production Cybercabs on public roads also began during the quarter, and the company began offering employee rides in Cybercabs on the Gigafactory Texas campus in July, both of which Tesla described as precursors to deploying Cybercab in its Robotaxi fleets. The company expanded its unsupervised Robotaxi operating area in Austin and launched unsupervised rides in Miami, Orlando and Tampa in July. Tesla said Robotaxi is now live in seven major metros: Austin, Dallas, Houston, Miami, Orlando and Tampa are listed as ramping unsupervised, while San Francisco Bay Area operations use FSD (Supervised) with a safety driver under a California TCP permit. Phoenix and Las Vegas are listed as preparations underway.

Manufacturing lines for Model S and Model X at the Fremont Factory have been decommissioned and first-generation Optimus lines are being installed there, with production the company anticipates later this year. Tesla said Tesla Semi remains on track for production this year at its new Nevada factory, and that Megafactory Texas is nearing completion with Megapack 3 and Megablock production planned for this year.

Tesla said it more than doubled its onsite compute in Texas during the first half of 2026, with Cortex 1 at more than 90 MW and Cortex 2 at more than 115 MW in production. The company described battery pack capacity as the main limiting factor on near-term vehicle production growth, with ramps underway for pack capacity in Berlin, cathode material production and lithium refining in Texas, LFP cells in Nevada and increased 4680 cell output. Construction and equipment procurement continued for the company's semiconductor fab in Austin, which Tesla described as still in its early stages.

On software, Tesla began delivering FSD v14 lite to customers in the U.S. and, in July, South Korea on AI3 hardware, and began rolling out its Summer Release with shareable Self-Driving Stats, expanded Grok functionality and broader Automatic Navigation. Following approval in the Netherlands, FSD received additional approvals in Lithuania, Estonia, Denmark and Belgium, with customers in those countries driving more than 50 million kilometers (31 million miles) on FSD as of July.

Outlook

Tesla said it is focused on maximum capacity utilization at its factories, and that deliveries and deployments will be impacted by aggregate demand, supply chain readiness and allocation decisions between sale to customers and use in its owned and operated fleet. The company said it will manage the business to maintain a strong balance sheet and sufficient liquidity to fund its product roadmap, long-term capacity expansion and further vertical integration.

Over time, Tesla said it expects hardware-related profits to be accompanied by an acceleration of AI, software and fleet-based profits. The company said Tesla Semi and Megapack 3 remain on schedule for production starting in 2026, and that first-generation Optimus production lines are being installed in anticipation of production in 2026. Capacity buildout tied to its multi-year AI compute, solar, battery material and semiconductor initiatives is underway.

Webcast Information

Tesla management will host a live company update and question and answer (Q&A) webcast at 4:30 p.m. Central Time (5:30 p.m. Eastern Time) on Wednesday, July 22, 2026 to discuss the results and outlook. The Q2 2026 Update and the webcast, live and replay, are available at https://ir.tesla.com. The webcast will be archived on the company's website following the call.

Source

Source: Tesla Q2 2026 Update (PDF), Tesla Investor Relations.

Compiled by StockTitan from Tesla's Q2 2026 Update. All figures are as reported by Tesla or calculated directly from the tables in that document. Segment gross profit and margin, the automotive revenue split, the operating expense breakdown and the composition of income before taxes are derived from the statement of operations; automotive gross margin excluding regulatory credits and the GAAP to non-GAAP bridge are as disclosed by Tesla. Statements about future production timing, capacity and product plans are Tesla's own. Non-GAAP net income and non-GAAP EPS exclude stock-based compensation expense and certain other items as detailed in the Reconciliation of GAAP to Non-GAAP Financial Information in the Q2 2026 Update. Free cash flow is defined as operating cash flow less capital expenditures. FSD (Supervised) requires active driver supervision and does not make the vehicle autonomous.

Investor Relations Contact: ir@tesla.com

FAQ

How did Tesla (TSLA) perform in Q2 2026 in terms of revenue and profit?

Tesla grew Q2 2026 revenue 26% year over year to $28.24 billion, while GAAP net income fell 5% to $1.11 billion. According to Tesla, operating margin narrowed to 1.4% as operating expenses and lower regulatory credit revenue weighed on profitability.

What were Tesla’s Q2 2026 earnings per share (EPS) for TSLA stock?

Tesla reported Q2 2026 GAAP diluted EPS of $0.32 and non-GAAP diluted EPS of $0.33. According to Tesla, both metrics declined year over year, with GAAP EPS down 3% and non-GAAP EPS down 18%, reflecting margin pressure and higher operating expenses.

What happened to Tesla’s free cash flow and capex in Q2 2026?

Tesla’s Q2 2026 free cash flow was - $1.09 billion, versus positive $146 million a year earlier. According to Tesla, operating cash flow rose 85% to $4.70 billion, but capital expenditures increased 142% to $5.79 billion, driving the negative free cash flow outcome.

How did Tesla’s automotive, energy and services segments perform in Q2 2026?

Automotive revenue rose to $20.52 billion, energy revenue to $3.14 billion, and Services and Other to $4.58 billion. According to Tesla, energy gross margin fell from 30.3% to 20.4%, while Services and Other achieved record gross profit with 14% segment margin.

What were Tesla’s Q2 2026 vehicle deliveries and FSD subscription metrics?

Tesla delivered 480,126 vehicles in Q2 2026, up 25% year over year. According to Tesla, active FSD subscriptions reached 1.48 million, growing 56% year over year, with record net new subscriptions and North American attach rates above 55% of new deliveries.

How strong was Tesla’s balance sheet at the end of Q2 2026?

Tesla ended Q2 2026 with $43.52 billion in cash, cash equivalents and short-term investments, up 18% year over year. According to Tesla, the sequential $1.2 billion decline reflected negative free cash flow driven primarily by a $3.3 billion sequential increase in capital expenditures.

What guidance and strategic priorities did Tesla share with TSLA investors for 2026 and beyond?

Tesla said it will focus on maximum factory utilization, strong liquidity and funding its AI, software, Robotaxi, Optimus, Semi and Megapack 3 plans. According to Tesla, it expects hardware profits to be complemented over time by accelerated AI, software and fleet-based profit contributions.