.png){kind=logo}
Tesla reported stronger-than-expected revenue for the second quarter of 2026, supported by record vehicle deliveries and higher energy storage activity. However, lower margins, rising research costs and heavy capital spending weighed on profit and cash flow.
The electric vehicle maker generated $28.24 billion in quarterly revenue, above market estimates. Adjusted earnings reached $0.33 per share, below the analyst consensus of about $0.50. Tesla also recorded negative free cash flow for the first time in more than two years.
Tesla delivered 480,126 vehicles during the quarter, up from 384,122 a year earlier. Model 3 and Model Y vehicles accounted for 467,762 deliveries, while other models contributed 12,364 units.
The delivery increase helped Tesla lift revenue by about 26% from the same period in 2025. The company also crossed $100 billion in trailing twelve-month revenue for the first time. Energy storage deployments reached 13.5 gigawatt-hours, compared with 9.6 gigawatt-hours a year earlier.
However, stronger volumes did not produce the same rise in earnings. Tesla’s average revenue per vehicle fell as the company used lower-priced models and other sales measures to support demand. Revenue from regulatory credits also dropped to $146 million, about two-thirds below the prior-year level.
Automotive gross margin reached 16.3%, below analyst expectations. Net income stood near $1.11 billion, while operating income fell 57% to $398 million. Higher costs across research, production and technology programs reduced quarterly profitability.
Tesla spent about $5.8 billion on capital projects during the quarter. That figure more than doubled from both the first quarter and the same period last year. The spending pushed free cash flow to negative $1.09 billion.
Chief Financial Officer Vaibhav Taneja said annual capital spending will exceed $25 billion. Tesla plans to direct that money toward artificial intelligence systems, robotaxi services, manufacturing equipment and robotics development.
Chief Executive Elon Musk described 2026 as ‘a massive capex year.’ He said the company expects its investments to support new products and production capacity. Tesla has started Cybercab production and continues installing manufacturing lines for its Optimus humanoid robot.
Higher research costs also reduced quarterly profit. Research and development spending rose as Tesla expanded work on autonomous driving, computing systems and new production programs. Tesla must fund these projects while managing lower vehicle prices and weaker credit revenue.
Tesla ended the quarter with about 1.48 million active Full Self-Driving subscriptions. The total increased 56% from a year earlier and included both monthly subscribers and customers with paid access.
The company said more than 55% of new North American deliveries included an FSD subscription. Tesla continues seeking wider approval for the driver-assistance system in Europe and China.
Musk said customers increasingly consider FSD when choosing a vehicle. Still, the software operates as a supervised system and requires driver attention. Tesla is also expanding its robotaxi operations while working through local rules and safety requirements.
Tesla shares fell after the results as traders reacted to the earnings miss, weaker automotive margins and negative cash flow. Revenue growth now runs alongside higher spending as the company builds its autonomy, energy and robotics businesses.
Also Read: Musk Fuels Tesla-SpaceX Merger Talk During Second-Quarter Earnings Call
