Tesla earnings, Elon Musk loom: What investors want to know (live coverage)

Elon Musk's Tesla will release its second-quarter earnings late Wednesday, but the focus likely will be on robotaxis, Optimus robots, capital spending and CEO Elon Musk.

Earnings are expected to grow 32% to 53 cents a share, according to FactSet, following strong Q2 EV deliveries reported earlier this month. That would be the second consecutive quarter of EPS growth after contracting in every quarter last year. Analysts expect revenue of $26.4 billion, a 17.5% increase compared to last year, according to FactSet.

The Tesla earnings conference call, with Musk at the helm, is set to start about 5:30 p.m. ET.

TeslaTSLA stock lost a fraction Wednesday afternoon, according to MarketSurge. Shares are below key moving averages.

While Tesla is still largely an EV company, its stock largely drags on hopes that it will dominate the physical AI market, largely via robotaxis and Optimus robots.

2:49 p.m. ET

Tesla-SpaceX Merger Rumors

Rumors about a possible merger between Tesla and SpaceX have swirled for months. They escalated in the lead-up to the SpaceX IPO last month. Today's earnings call will be the first for an Elon Musk company since the IPO.

The two companies already have close ties. Tesla is an investor in SpaceX, through an earlier investment in xAI. Musk's two companies are collaborating on plans to build the Terafab semiconductor factory. Investors will be parsing management's words carefully for any indications of further Tesla-SpaceX collaboration.

2:38 p.m. ET

Terafab And Solar Cell Fab

Earlier this year, Tesla had laid out plans to build two massive factories. One, the Terafab, built in conjunction with SpaceX, would be the largest semiconductor factory in the world. The other, dubbed as the solar fab, intends to eventually produce up to 100 gigawatts of solar cells per year.

Both projects would require tens of billions of dollars to stand up, if not more. Neither is included in Tesla's forecast of $25 billion in 2026 capex spending. The two factories would be in keeping with Tesla's longstanding efforts to vertically integrate.

The Terafab would reduce Tesla's reliance on AI chips from companies like Samsung and NvidiaNVDA.

But there's no guarantee that after spending up to or above $100 billion on the Terafab that Tesla would be competitive with Samsung and Taiwan SemiconductorTSM in cutting-edge chips, let alone deliver a strong return on investment. There's are good reasons why Nvidia and many chip designers — including Tesla — outsource production to Taiwan Semi and Samsung.

Meanwhile, the solar fab would make solar cells that would eventually power Tesla's AI data centers. Once again, can Tesla achieve ROI vs. simply buying solar cells?

1:55 p.m. ET

Tesla FSD Questions

Investors will be looking for further updates on subscriptions to Tesla's Full Self-Driving software, especially after the system received its first government approvals in Europe last quarter. Since April, at least five countries in Europe have approved FSD, though Frances transport minister said Wednesday that the country won't sign off on FSD yet.

However, the real question is when FSD will achieve truly autonomous driving. Musk has been promising fully autonomous vehicles "this year" or "next year" for a decade, but has yet to deliver. What will Musk say on the Q2 call?

In April, Tesla released an updated version of FSD that Musk billed as making its EVs "sentient." It still lacked true autonomy. A scaled down version of FSD 14 for older Tesla Hardware 3 models is expected to roll out later this month.

Years ago, Musk promised FSD owners that HW3.0 was "hardware ready" for autonomous driving, but over the past year has conceded that likely will not be true. Upgrading those vehicles or compensating owners could be hugely expensive.

1:04 p.m. ET

Tesla Energy

Tesla's energy storage business remains a bright spot for the company in terms of growth and margins. Analysts expect the division to grow 27.5% year over year to $3.6 billion, with gross income of $1.03 billion, which implies gross margins of 29%, according to FactSet.

Energy deployments in the second-quarter totaled 13.5 gigawatt-hours, which was slightly below the 13.8 Gwh analysts expected, according to an estimate compiled by Tesla.

Investors Focused On Robotaxis, Optimus

Investors are also clamoring for updates on Tesla's development of robotaxis and Optimus robots. Over the past month, Tesla rolled out robotaxis to three new cities in Florida, but the total number of self-driving vehicles operating at any time remains very low.

Management — and most investors — don't expect robotaxis to contribute any meaningful revenue until 2027. And that timeline could easily slip.

Meanwhile, Musk and his team had previously told investors Tesla would start producing Optimus robots either late this month or in August. Musk has hedged on what actual production levels will be, assuming output kicks off. It's also unclear if the latest Optimus version will be able to do many useful tasks.

Capital Spending Seen Soaring

To fund robotaxis, robots and more, Tesla has forecast capex spending of $25 billion this year, close to triple 2025's level. That excludes Tesla's planned massive Terafab chip project with sister company SpaceXSPCX. So far, Musk's company hasn't reported a major increase in capex spending. So investors will be looking closely to see if that changed in Q2. If it does, it is likely to lead to negative free cash flows. In fact, analysts expect Tesla to have negative cash flows of $3.1 billion — the first decline since Q1 2024, according to FactSet.

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