AI Takeaway
Tesla reported Q2 FY2026 revenue growth of 25.5% to $28.24B, but operating income fell 56.9% to $398M as AI-related R&D, stock-based compensation and other operating costs rose sharply, while year-to-date capital spending accelerated. Source: 10-Q Item 2 MD&A, pp.28-36; 10-Q Income Statement (XBRL).
Revenue
$28.24B
++25.52% YoY
EPS (Basic)
$0.34
-5.56% YoY
Gross Margin
16.8%
-0.41% YoY
Operating Income
$398M
-56.88% YoY
Filed · Source: SEC EDGAR 10-Q filing
Tesla (TSLA) reported Q2 FY2026 revenue of $28.24B, up 25.5% year over year. The company posted net income of $1.11B, down 4.9% from a year earlier, with diluted EPS of $0.32. Gross margin was 16.8%.
Total revenue rose $5.74B, or 26%, year over year to $28.24B. Automotive sales increased $4.22B, or 27%, primarily on an approximately 25% increase in cash deliveries, while services and other revenue increased $1.54B, or 50%, driven by used-vehicle sales, maintenance and collision revenue, and paid Supercharging sessions. Source: 10-Q Item 2 MD&A, pp.30-31
Source: 10-Q Item 2 MD&A, pp.30-31
Energy generation and storage revenue increased 13% to $3.14B, primarily from higher Megapack deployments, but segment gross margin declined to 20.4% from 30.3%. Management attributed the margin decline to deployment timing, a lower average selling price per Megapack, unfavorable sales mix and warranty adjustments. Source: 10-Q Item 2 MD&A, pp.31-32
Source: 10-Q Item 2 MD&A, pp.31-32
R&D expense increased 49% to $2.37B, primarily due to AI and other product programs, including a $189M increase in stock-based compensation. SG&A increased 45% to $1.98B, including a $283M increase in stock-based compensation primarily related to the 2025 CEO Performance Award, contributing to the decline in operating income. Source: 10-Q Item 2 MD&A, pp.32-33
Source: 10-Q Item 2 MD&A, pp.32-33
For the six months ended June 30, 2026, capital expenditures were $8.28B versus $3.89B in the prior-year period, focused on AI and operational infrastructure, factory expansion, machinery and equipment. Tesla expects capital expenditures to exceed $25B in 2026, driven by compute infrastructure and data centers, manufacturing and R&D facilities, AI-enabled fleet assets, and retail, service and charging expansion. Source: 10-Q Item 2 MD&A, pp.28, 30, 35-36
Source: 10-Q Item 2 MD&A, pp.28, 30, 35-36
The effective tax rate declined to 15% from 23%, partly because Tesla released a valuation allowance on certain California deferred tax assets, producing a $274M income-tax benefit. Other income also increased by $270M, primarily due to a mark-to-market gain on Tesla's SpaceX equity investment, bitcoin valuation adjustments and foreign-exchange movements. Source: 10-Q Item 2 MD&A, pp.33-34
Source: 10-Q Item 2 MD&A, pp.33-34
Operating income fell 56.9% year over year to $398M even as revenue increased 25.5%, as R&D rose 49.2% to $2.37B and SG&A rose 45.1% to $1.98B. If operating expenses continue to grow faster than gross profit, operating profitability could remain under pressure. Source: 10-Q Income Statement (XBRL)
Source: 10-Q Income Statement (XBRL)
Operating cash flow for the six months ended June 30, 2026 was $8.63B, while capital expenditures were $8.28B, implying approximately $354M of free cash flow, down from approximately $806M in the prior-year period. Tesla's higher investment spending creates execution and funding risk if expected returns or operating cash generation do not materialize. Source: 10-Q Item 2 MD&A, pp.28, 35-36
Source: 10-Q Item 2 MD&A, pp.28, 35-36
Total liabilities increased 20.8% year over year to $61.01B, faster than stockholders' equity growth of 12.3% to $86.86B; long-term debt increased 54.6% to $7.72B. The reported debt-to-equity ratio was 0.70x, indicating a greater reliance on liabilities relative to equity than a year earlier. Source: 10-Q Balance Sheet (XBRL)
Source: 10-Q Balance Sheet (XBRL)
Automotive regulatory-credit revenue declined 67% year over year to $146M in Q2 FY2026. Because this revenue stream has historically supported automotive profitability, further declines could weigh on results unless offset by vehicle, software, services or energy-margin improvements. Source: 10-Q Item 2 MD&A, p.31
Source: 10-Q Item 2 MD&A, p.31
Reported EPS of $0.33 versus the $0.51 analyst consensus — a -35.3% miss for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $28.24B | $22.5B | +25.52% |
Cost of Revenue | $23.48B | $18.62B | +26.14% |
Gross Profit | $4.75B | $3.88B | +22.51% |
Operating Income | $398M | $923M | -56.88% |
Net Income | $1.11B | $1.17B | -4.95% |
EPS (Basic) | $0.34 | $0.36 | -5.56% |
EPS (Diluted) | $0.32 | $0.33 | -3.03% |
R&D Expense | $2.37B | $1.59B | +49.21% |
SG&A Expense | $1.98B | $1.37B | +45.10% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $148.52B | $128.57B | +15.52% |
Current Assets | $68.76B | $61.13B | +12.47% |
Total Liabilities | $61.01B | $50.49B | +20.81% |
Current Liabilities | $35.42B | $30.01B | +18.05% |
Stockholders' Equity | $86.86B | $77.31B | +12.34% |
Cash & Equivalents | $15.22B | $15.59B | -2.36% |
Long-Term Debt | $7.72B | $4.99B | +54.61% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $8.63B | $4.7B | +83.86% |
Investing Cash FlowYTD | $-10.95B | $-4.59B | -138.32% |
Financing Cash FlowYTD | $1.21B | $-554M | +318.23% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 16.8% | 17.2% | -0.41% |
Operating Margin | 1.4% | 4.1% | -2.69% |
Net Margin | 3.9% | — | — |
ROE | 1.3% | — | — |
ROA | 0.8% | — | — |
Current Ratio | $1.941 | — | — |
Debt to Equity | $0.702 | — | — |
Expected release date, analyst estimates & what to watch
Tesla's Q1 2026 10-Q shows a strong rebound with revenue up 15.8% YoY to $22.4B, gross margin expanding nearly 5 percentage points to 21.1%, and operating income surging 135.8% to $941M, though net income of $477M reflects elevated R&D and SG&A spending.
Tesla's FY2025 revenue declined 2.9% to $94.8B while net income fell 46.5% to $3.8B, as surging R&D costs (+41.2%) and pricing pressures compressed operating margins to 4.6% from 7.2% the prior year.
Other companies in Automobile Manufacturers
Tesla generated $28.24B of revenue in Q2 FY2026, up 25.5% year over year. Automotive sales rose 27% to $20.01B, while services and other revenue increased 50% to $4.58B. Source: 10-Q Item 2 MD&A, pp.30-31
Operating income declined 56.9% year over year to $398M despite revenue growth. R&D increased 49% to $2.37B on AI and related programs, while SG&A increased 45% to $1.98B, including higher stock-based compensation and litigation-related operating expenses. Source: 10-Q Income Statement (XBRL); 10-Q Item 2 MD&A, pp.32-33
The principal takeaway was strong top-line growth alongside weaker operating profitability: revenue rose 25.5% to $28.24B, while operating margin fell to 1.4% from 4.1%. Tesla is also accelerating investment, with six-month capital expenditures of $8.28B and expected 2026 capex above $25B. Source: 10-Q Income Statement (XBRL); 10-Q Item 2 MD&A, pp.28, 35-36
The filing reports cash flow on a six-month year-to-date basis rather than a standalone quarter. Six-month operating cash flow was $8.63B and capital expenditures were $8.28B, resulting in estimated free cash flow of approximately $354M. Source: 10-Q Item 2 MD&A, pp.28, 36
The filing provides reported diluted EPS of $0.32 and net income of $1.11B, but it does not provide analyst consensus estimates. Therefore, whether Tesla beat or missed external earnings estimates cannot be determined from this 10-Q alone. Source: 10-Q Income Statement (XBRL)