Tesla Q2 Revenue Up 25.5% to $28.2 Billion, but Operating Profit Misses at $400 Million

Tesla reported second-quarter results on July 22, 2026. Revenue reached $28.2 billion, up 25.5% year-on-year, but operating profit fell sharply to $400 million, well below expectations. Core automotive sales revenue came in at $20 billion, up 27% year-on-year, driven by higher delivery volumes. However, the average selling price per vehicle declined to $42,000, down $1,300 quarter-on-quarter, due to a mix shift toward lower-priced models, continued promotional discounts, and regional mix changes. Automotive gross margin stood at 16.3%, missing analysts' estimates. A one-time warranty and tariff benefit of $250 million in the prior quarter did not recur, while higher commodity prices and rising interest rates increased financing costs. Research and development expenses totaled $2.37 billion, continuing to rise as the company invested in FSD training iterations, AI5 chip design, Cybercab, and Optimus. Capital expenditure reached $5.8 billion, up $3.3 billion from the previous quarter, resulting in free cash flow of minus $1.1 billion. Net income was $1.1 billion, boosted by a $1 billion gain from SpaceX equity investments. Vehicle production stood at 450,000 units, and inventory days on hand fell to 14. On the AI front, Tesla did not provide specific timelines for the V3 unveiling or production ramp of Optimus, only mentioning a target annual capacity of 10 million units for Optimus 4. The Robotaxi service operates in Austin with approximately 30 to 50 vehicles, of which 50% to 60% of trips are unsupervised. No large-scale commercialization milestone was disclosed. FSD has been approved in several European countries and is pending approval in China, with no confirmed timeline for offering unsupervised driving to individual consumers. Capital expenditure guidance remains above $25 billion, primarily for expanding the Robotaxi fleet, boosting Optimus production capacity, building a semiconductor factory, increasing solar manufacturing capacity, and constructing AI infrastructure. Cash and investments stood at $43.5 billion.