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After the close on Wednesday, Tesla reported second-quarter earnings that were far below views despite strong revenue growth on EV sales.
Capital spending jumped, leading to negative cash flow in the quarter, but both less than forecast. Tesla told investors it plans to spend $25 billion in capex this year in order to fund it futuristic projects in robotaxis and humanoid robots. Given this was the first quarter in 2026 in which Tesla recorded major outlays, investors wanted to know more details about when those investments would lead to new products hitting the markets.
Musk and his team were clear: that will take time. When it came to robotaxis, Musk preached caution. The priority, he said, was to avoid any serious accidents that would risk regulators bringing down the hammer on the company. The timelines for Optimus seemed even farther out. Commentary during the call made it seem as though the production lines at the Fremont, California factory were still in the process of getting up and running.
Despite, those delays, Tesla's car business did blow past analyst expectations. But even here the good news was tempered by the fact that higher sales volumes came at the expense of lower margins. A healthy EV business will help lessen the burden of Tesla's "massive" capex spending over the course of the year.
"You can't have both a demand recovery and a margin expansion in the same quarter," said Will Rhind, CEO of GraniteShares which has several ETFs that track Tesla stock. "Tesla is retooling factories and burning cash on future product lines. Long-term holders signed up for exactly this trade-off."
TeslaTSLA declined solidly in after-hours trade, extending losses as Musk spoke. Shares fell slightly in Wednesday's regular session, according to MarketSurge.
6:35 p.m. ET
Tesla Earnings Call Over
The Tesla earnings call is over. TSLA stock is down 4.4%, falling on the earnings miss and Musk's robotaxi and Optimus caution.
6:33 p.m. ET
Musk: Capex Speed Vs. Efficiency
When asked about capital efficiency given Tesla's huge capex spend this year, Musk said the priority was to get things done fast. In typical fashion, he advocated spending what was necessary in order to achieve its goals. Musk said Tesla should spend capex as quickly as it can without being wasteful. "Its ok to be little less capital efficient if we get things done faster," he said.
6:24 p.m. ET
Tesla Vehicles As Starlink Hotspots?
In the future, Tesla's equipped with SpaceX's Starlink terminals could potentially be used as cell towers or internet hotspots, Musk said in response to a question on the matter.
6:19 p.m. ET
Tesla Explains Robotaxi Expansion Strategy
Tesla said it hasn't grown the number of robotaxis in the cities that currently have the service because it wanted to test the system across a large geography. Doing so would allow Tesla to work through any potential issues it might encounter in a specific city with a smaller number of robotaxis rather than having to do so across a large fleet. Musk also added that the Cybercab would require its own training data because it had a different chassis than other Tesla EVs.
6:15 p.m. ET
Musk Won't Comment On Tesla-SpaceX Merger
Musk was asked directly if he saw a merger as Tesla-SpaceX as beneficial to both companies. Both Musk and Tesla General Counsel Brandon Ehrhart declined to answer, citing SEC regulations that prevented them from doing so. The two companies have deepened their relationship in recent months. For example, Tesla is an investor in SpaceX.
6:12 p.m. ET
No Robotaxi Demand Issues
When asked about future demand for robotaxis, Musk answered "I don't think we'll have any demand challenges with robotaxi."
He once again stressed the importance of moving beyond 99% or even 99.99% in terms of robotaxi safety.
6:10 p.m. ET
Tesla Says New Jersey Bill 'Disheartening'
Tesla's VP of Vehicle Engineering called a recently proposed bill in New Jersey that would require robotaxi operators to have more than one type of sensor "disheartening." If that bill became law, it would effectively ban Tesla robotaxis in New Jersey because they operate using a camera-only system.
6:06 p.m. ET
Musk: Suppliers Investing For Optimus
The first question during the Q&A portion is about whether suppliers have offered to invest alongside Tesla in developing Optimus. Musk responded by saying suppliers have already made huge investments to support robotaxi and Optimus. He cited TSMC, Samsung and Panasonic, which are three of Tesla's biggest suppliers.
Musk then made a point of thanking Micron Technology for providing Tesla with memory chips amid a shortage.
6 p.m. ET
Tesla Hails Robotaxi Performance
VP of AI Ashok Elluswamy said Tesla's future robotaxi rollout will happen on a state-by-state basis rather than by individual cities.
Like Musk before him, Elluswamy reiterated that Tesla would prioritize safety when rolling out its robotaxi service. He mentioned Tesla robotaxi's "impeccable record" at least three times, citing "zero notable incidents" in the 380,000 miles of unsupervised driving.
He said Tesla robotaxis are now running early versions of the upcoming Full Self-Driving 15.
5:55 p.m. ET
Operating Expenses
Operating expenses rose largely on the back of significant increase in spending on R&D activities, costs associated with ramping up production of Cybercab, Tesla Semi and Optimus. Tesla also incurred certain litigation expenses that raised costs, Taneja said.
Tesla could borrow up to $30 billion in debt to fund some of its additional investments.
5:54 p.m. ET
Tesla Energy 'Lumpy'
Tesla reiterated that the energy business is "inherently lumpy" because deployments are subject to their customers' timelines. Margins for this business unit declined in the second quarter. Taneja added that he expects energy margins will stabilize around mid-20%.
5:50 p.m. ET
CFO Touts EV Demand
CFO Vaibhav Taneja said rebounding demand for EVs continued into the second quarter. As a result, Tesla is working to expand production for vehicles and components.
In North America 55% of vehicle purchases included FSD subscriptions at the time of purchase, according to Taneja.
5:44 p.m. ET
Musk: Terafab Location 'Soon'
Tesla expects to announce a location for the Terafab chip plant "soon." It'll be built with SpaceX.
5:38 p.m. ET
Musk Preaches Robotaxi, Optimus Caution
As on the Q1 earnings call, Musk preached caution in expanding Tesla's robotaxi service. Any accident would receive significant press coverage, which would lead to public backlash. "Regulators will immediately clamp down on our activities."
Optimus will be the hardest product to scale manufacturing that Tesla has ever made, Musk said.
5:36 p.m. ET
Musk: 'Massive' Capital Spending This Year
Tesla will have a "massive" increase in capex this year, Musk says. But the investments "will yield incredible returns, really best capex returns that we've ever seen."
5:34 p.m. ET
Elon Musk Touts FSD Demand
Musk says customers are buying FSD "with whatever car it comes with." In essence, FSD is driving car sales, rather than being an add-on when customers purchase a Tesla EV, according to Musk.
5:19 p.m. ET
Tesla Auto Margins
Margins for Tesla's auto business, excluding regulatory credits, rose to 16.3% compared to 15% in Q2 2025. But they fell vs. Q1's 19%.
Total auto gross margin including credits was 16.9%, below 21.1% in Q1.
4:54 p.m. ET
Tesla Results Raise Concerns Into Call
Tesla is asking investors to look beyond its near-term EV business and to judge it on its future AI ambitions. The problem is that this quarter demonstrated how difficult that can be when auto margins don't hold up. Yes, EV sales rose but they didn't throw off enough cash due to lower average selling price. That raises the stakes for Tesla's robotaxi and Optimus robots, as the company plans to continue burning cash for the rest of the year.
"Ultimately, Tesla is asking investors to fund an aggressive infrastructure cycle: if its pivot into autonomous fleets and physical AI succeeds, the long-term upside is massive, but any regulatory or technological delays leave the stock vulnerable if judged solely on its core automotive margins," said David Wagner, Head of Equity and Portfolio Manager at Aptus Capital Advisors.
Futures: Google, Tesla Fall On Earnings, But Strong CapEx Lifts AI Stocks
4:40 p.m. ET
Tesla Robotaxis, Optimus
The earnings statement didn't contain major updates about Tesla's robotaxi expansion or Optimus plans. Tesla did say it had begun test drives of its purpose-built Cybercab on public roads and that it had offered employees at its Texas campus rides in the new model this month. But that was already known.
Tesla told investors that production for Optimus robots would begin "soon." On its previous earnings call in April, the company had said it expected production to begin in late July or August.
Investors will await more details on robotaxis and robots on the conference call.
4:37 p.m. ET
Tesla Blames Lower EV Prices, Tax Credits
Tesla attributed a portion of its earnings and profit miss to lower average selling price for its EVs. Heading into the call investors had hoped the quarter's strong delivery numbers hadn't come on the back of lower prices.
Meanwhile, Tesla reported $146 million in regulatory credits, down from $380 million in Q1 and $439 million in Q2 2026. Sales of emission credits to other automakers, recently eliminated in the U.S., are essentially pure profit for Tesla.
"We already know it was a record delivery quarter, but if was achieved through price cuts or other incentives, it will be read as a hollow beat," Bill Birmingham, Managing Director at REX Shares, told IBD in an email prior to the earnings report.
4:32 p.m. ET
Key Tesla Revenue Drivers
Two of Tesla's three revenue categories topped estimates. Total automotive revenue rose 23% to $20.5 vs. an expected $18.9 billion, according to FactSet. Meanwhile, revenue from "services and others," which includes FSD subscriptions and Superchargers, was up 50% to $4.6 billion. That topped views for $3.9 billion.
Energy storage revenue rose 13% to $3.1 billion, but missed analyst expectations of $3.6 billion.
4:24 p.m. ET
FSD Subscriptions Surge
In the second quarter, Tesla reported 1.48 million FSD subscribers, up 56% from the same time last year. Subscriptions were likely helped by the fact FSD received its first approvals in Europe. Also, Tesla no longer lets Tesla owners buy FSD outright.
4:24 p.m. ET
Capital Spending Up, Cash Burns
Tesla stepped up its capex spending this quarter to $5.8 billion from $2.5 billion in Q1. That was still below the $6.7 billion analysts expected, according to FactSet.
The increase in capex led to negative free cash flows of $1.1 billion, the first cash decline since Q1 2024. Analysts had expected Tesla would burn $3.1 billion in cash, according to FactSet. Lower-than-expected capex helped.
4:12 p.m. ET
Tesla Earnings Miss, Sales Top
Earnings fell 18% compared to Q2 2025 to 33 cents a share. Revenue came in at $28.2 billion, which was 28% higher than last year. Ahead of the call analysts had expected EPS of 53 cents and revenue of $26.4 billion.
Operating income of $398 million was 57% below the same time last year. Wall Street had forecast $1.69 billion.
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.
Tesla Earnings Estimates
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.
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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