EVwire brief: Tesla reported all-time record quarterly revenue of $28.2 billion in Q2 2026, up 26% YoY, while operating income fell 57% to $398 million.
The quarter also pushed Tesla past $100 billion in revenue on a trailing twelve-month basis for the first time in company history. Total gross margin came in at 16.8%, and diluted non-GAAP EPS at $0.33, well below the $0.55 in the company-compiled analyst consensus.
Behind the profit squeeze: capital expenditures more than doubled to a record $5.8 billion, operating expenses rose 47% on AI projects and stock-based compensation, and regulatory credit revenue nearly vanished. Free cash flow went negative at $1.1 billion, Tesla's first negative quarter since early 2024.
Details: the quarter in numbers:
Revenue: $28.24B total (+26% YoY), of which automotive $20.52B (+23%), energy generation and storage $3.14B (+13%), and services and other $4.58B (+50%, an all-time record)
Profitability: gross profit $4.75B (16.8% margin), operating income $398M (1.4% operating margin), adjusted EBITDA $3.27B (11.6% margin, down 353 bp YoY)
Bottom line: GAAP net income $1.11B (-5% YoY), non-GAAP net income $1.15B (-17%), diluted EPS $0.32 GAAP / $0.33 non-GAAP
Cash: operating cash flow $4.7B (+85%), capex $5.79B (+142%), free cash flow negative $1.09B, quarter-end cash and investments $43.5B
Operations: 480,126 deliveries (+25%, a Q2 record), 451,758 vehicles produced, 13.5 GWh of storage deployed (+41%), global inventory down to 15 days of supply
One accounting footnote worth knowing before the bottom line gets quoted anywhere: GAAP net income got a $1.0 billion lift from an unrealized gain on Tesla's SpaceX stake, which the cash flow statement shows was purchased for $2.0 billion in Q1.
The non-GAAP view strips that out, which is why adjusted profit fell 17% even as GAAP profit looks nearly flat.
Tesla generated over $100B in revenue on a trailing twelve-month basis for the first time. We achieved record second-quarter vehicle deliveries, with continued growth in new markets and strength in established markets. Our Energy Storage business returned to growth, achieving its second-best quarterly deployment number and record deployments on a trailing twelve-month basis. The Services and Other business achieved record profitability and margin in the quarter.
Where the money is going
Capex rose $3.3 billion in a single quarter. The deck spreads the money across AI training compute, a chip fab, batteries, and new vehicle and energy factories:
โWe have more than doubled our onsite compute in Texas (in terms of MW of compute) during the first half of 2026. Cortex 2 supports the development of both vehicle and humanoid robot autonomy software and will ramp further over the rest of the year to ensure we have sufficient compute resources.โ
Cortex 1 is listed at over 90 MW of compute and Cortex 2 at over 115 MW, both in production. On the AI5 chip front, Tesla says construction and equipment procurement continue for the Austin semiconductor fab:
"While still in its early stages, this project is critical to building our own chipmaking capabilities to ensure reliable long-term supply of essential logic and memory chips for our products." Site work also "progressed in the quarter for solar and semiconductor manufacturing," a quiet confirmation that Tesla intends to manufacture solar again, at scale.
On batteries, the deck repeats a familiar constraint:
"Progress also continued on battery pack capacity expansion โ the main limiting factor to near-term vehicle production volume increase."
The capacity table lists Nevada LFP cells at 7 GWh in early ramp, Texas 4680 output above 40 GWh, cathode materials at 10 GWh and lithium refining at 30 GWh in early ramp, plus a 4680 line under construction in Berlin.
Cybercab is now a production vehicle
We started production of Cybercab, our purpose-built autonomous EV designed to be the workhorse of our Robotaxi fleet. Engineering test drives of production Cybercabs on public roads also began during the quarter, and we began offering employee rides in Cybercabs on our Gigafactory Texas campus in July, both important precursors to Cybercab deployment in our Robotaxi fleets.
The installed-capacity table puts Cybercab at over 125,000 units of annual capacity at Gigafactory Texas, the same figure listed for Cybertruck. The deck includes a photo of gold Cybercab bodies moving down the Texas line, and an interior shot of employees riding one on campus.
On the Robotaxi network itself:
We expanded the unsupervised operation area in Austin and launched unsupervised rides in Miami, Orlando and Tampa in July. Preparation for expansion of our Robotaxi service to additional U.S. metros continued, including testing, permitting and first responder training.
The announced coverage map now shows seven metros ramping unsupervised (Austin, Dallas, Houston, Miami, Orlando and Tampa, plus the SF Bay Area running with a safety driver under a California TCP permit), with Phoenix and Las Vegas listed as "preparations underway."
Cumulative paid Robotaxi miles reached roughly 2.4 million (about 3.9 million km) by the end of June, with the curve visibly steepening from February onward.
v
Optimus moves into Fremont as S and X bow out, Semi incoming
โWe have decommissioned the manufacturing lines for Models S & X at our Fremont Factory and are installing the first-generation lines for Optimus, where we expect to start production soon. The initial Optimus builds will be used in our Optimus Academy for training data collection and further functionality development.โ
The Outlook section commits to "production in 2026" for first-generation Optimus, alongside Tesla Semi and Megapack 3, both of which "remain on schedule for production starting in 2026."
The Semi factory in Nevada is listed as commissioning, and the deck closes its photo section with a Semi rolling off the end of the line. The Roadster, for the record, still sits in the capacity table under "design development."
FSD: 1.48 million subscribers and a record attach rate
Active FSD subscriptions hit 1.48 million, up 56% YoY, and the deck highlights a milestone in how new buyers behave:
FSD adoption grew in the quarter, including record net new subscriptions. We also achieved record FSD attach rates in North America, with over 55% of new deliveries including FSD subscriptions.
FSD v14 lite began rolling out to AI3 (HW3) vehicles in the US, with South Korea following in July. In Europe, Tesla received approvals in Lithuania, Estonia, Denmark and Belgium on top of the Netherlands, and customers in approved countries have driven over 50 million kilometers (31 million miles) on FSD as of July.
Tesla adds that it is "seeing elevated interest in our vehicles in markets with FSD approval." Cumulative miles driven on FSD (Supervised) now approach 12 billion (over 19 billion km) across the fleet.
Energy: second-best quarter ever, Megafactory Texas next
We achieved record energy storage deployments in EMEA, supported by record deployments from Megafactory Shanghai, which continues to ramp production. We are also on track to begin production of Megapack 3 and Megablock this year at our new Megafactory Texas.
Storage deployments of 13.5 GWh were up 41% YoY and second only to Q4 2025's 14.2 GWh, with record deployments on a trailing twelve-month basis. Powerwall 3P, a three-phase Powerwall, launched in Germany, and Tesla says it is "focused on bringing Powerwall 3P to other three-phase markets as quickly as possible."
Details: network and fleet numbers from the deck:
Supercharger network: 8,704 stations (+18% YoY) with 82,357 connectors (+17%), after adding over 2,400 net new stalls in the quarter
Cumulative all-time deliveries: 9.7 million vehicles
Installed vehicle capacity: Shanghai over 950,000/year, Fremont over 550,000, Berlin over 375,000, Texas over 250,000 Model Y plus 125,000 each for Cybertruck and Cybercab
Vehicles on operating lease: 141,876 (-18% YoY); days of supply: 15, down from 27 in Q1
What stands out to us
Services and Other is quietly becoming a real business: $4.58 billion in revenue, up 50%, with the deck noting that "Services and Other gross profit grew $302M sequentially to a record $648M, achieving a 14% gross margin, with growth driven by all major segments."
The Outlook section also spells out the thesis behind the ugly operating margin more plainly than usual: "While we continue to execute on innovations to reduce the cost of manufacturing and operations, over time, we expect our hardware-related profits to be accompanied by an acceleration of AI, software and fleet-based profits."
And the letter closes with the framing Tesla wants this quarter remembered by:
โTesla is in its largest and most exciting period of investment. From here, there remains much hard work as we aim to revolutionize transportation, energy and productivity through our leading real-world AI. Scaling will be non-linear, and we are focused on long-term value creation. We've never been more optimistic about the future.โ
A 1.4% operating margin from the world's most valuable automaker would normally read as a crisis. Tesla is asking to be graded as an AI and robotics company mid-buildout instead. Whether the market accepts that grading scale is this afternoon's question.
Source: Tesla Q2 2026 Update; Tesla IR
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