Tesla shares dropped more than 7% in premarket trading Thursday after the automaker missed profit estimates and confirmed capital spending above $25 billion for 2026.
Key Points:
- Tesla posted record second quarter revenue of $28.24 billion, yet adjusted earnings of $0.33 per share fell well short of Wall Street forecasts.
- Finance chief Vaibhav Taneja said full-year capital spending will exceed $25 billion and keep climbing for another two or three years.
- Operating margin narrowed to 1.4% from 4.1% a year earlier as operating expenses jumped 47%.
Tesla Revenue Beats As Profit Sinks
The company reported revenue of $28.24 billion for the second quarter, up 26% from a year earlier and comfortably above the roughly $26.3 billion analysts had penciled in. Adjusted earnings arrived at $0.33 per share, against forecasts near $0.50. Adjusted EBITDA of $3.2 billion also trailed the $4 billion Wall Street wanted from the period.
Operating income fell 57% to $398 million, and operating margin narrowed to 1.4% from 4.1% a year earlier as operating expenses climbed 47% to $4.35 billion on artificial intelligence work, research and stock compensation. Regulatory credit revenue shrank to $146 million from $439 million, while capital spending more than doubled to $5.79 billion and pushed free cash flow to negative $1.09 billion.
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Musk And Taneja Defend Capex Surge
Chief Executive Elon Musk called this a massive capex year and said he expects the investments to produce strong returns over time. Chief Financial Officer Vaibhav Taneja put the full-year figure above $25 billion and warned the spending pace will keep rising for another two or three years. Neither executive offered a date for the payoff.
Taneja also told analysts that Tesla is arranging debt facilities worth as much as $30 billion, money set aside for robotaxis, Optimus robots, a semiconductor fab, solar manufacturing and AI compute infrastructure.
Analysts Weigh Tesla's Robotics Bet
Gross margin slipped to 16.8%, under the 19.5% consensus, as cheaper Model 3 and Model Y versions replaced the retired and higher-priced Model S and Model X. Deepwater Investment's Gene Munster credited the end of the EV winter that began in March 2024, along with high gasoline prices and fading political headwinds. Deutsche Bank's Edison Yu wrote that international demand is carrying the quarter, with Europe leading and China adding support.
The volume itself was never in doubt. Tesla delivered 480,126 vehicles, deployed 13.5 gigawatt hours of energy storage, grew full self-driving subscriptions 56% to 1.48 million, and said Optimus production remains on track to begin later this year at its Fremont, California, plant.
Tesla's credit windfall has been shrinking for two years. Sales of regulatory credits peaked at $2.76 billion in 2024, then slid 28% the following year, and Washington phased out the $7,500 federal EV incentive at the end of September 2025. Lawmakers also erased the fuel-economy penalties that had given rival automakers any reason to buy those credits in the first place.
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